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Manufacturing jobs return from abroad

Keywords: Tags  Harry Moser, Reshoring Initiative, offshoring, manufacturing, Thomas Danjczek, Steel Manufacturers Association, production costs, Samuel Frizell


NEW YORK — U.S. manufacturers have on aggregate stopped offshoring U.S. jobs as domestic production gets comparatively cheaper than producing goods abroad, according to Harry Moser, president and founder of the Reshoring Initiative.

"We’re not saying offshoring has stopped, but ... reshoring has started," he told AMM. "We believe that the offshoring and reshoring are approximately in balance—that the number of jobs being offshored and the number of jobs being reshored are about even."

A number of original equipment manufacturers (OEMs) have brought jobs back Stateside from abroad since the recession.

Caterpillar Inc. opened two hydraulic excavator plants in 2010 and 2012, including a 600,000-square-foot plant in Victoria, Texas, with 500 workers and a facility in Athens, Ga., with 3,200 employees (amm.com, Feb. 17, 2012). And Kobe Aluminum Automotive Products LLC is set to begin producing cast aluminum bars in August at a new facility in Bowling Green, Ky., to supply Toyota Industries Compressor Parts America Co.’s new air conditioning parts plant in Pendergrass, Ga., all jobs that have moved back to the United States to serve the U.S. market (amm.com, Nov. 21).

In total, 50,000 manufacturing jobs have been brought back to the United States out of a total of 500,000 manufacturing jobs that have been created since the economy bottomed out in early 2010, Moser said, partially due to increasing labor costs abroad.

"Chinese wages have been going up 18 percent per year (in dollar terms) for the past 10 or 15 years and the labor cost per unit has gone up on things produced there," he said. "About 25 percent of what is produced offshore would have a lower total cost if produced here."

Low labor costs, cheap natural gas and high productivity make the United States an attractive place for OEMs to relocate, as well as eliminating export and freight costs, Moser said.

"We’re seen as the low-cost developed country because of currency, which makes our labor cheap within the developed countries. ... But the real advantage U.S. manufacturers have is that they’re here. So all these costs when they export here—all this travel (freight charges, export fees)—the local manufacturers have almost none of that," Moser said.

Steel Manufacturers Association president Thomas A. Danjczek said that the business environment in North America is comparatively attractive for steelmakers. "North America is a low-cost producer of steel because of access to raw material, high labor productivity, low energy costs, access to capital and low transportation costs within our market," he said.

The U.S. metals industry sees increased business when OEMs move back home, playing an important part in the supply chain, Danjczek said, noting that reshored manufacturers will use more U.S. steel.

"For every auto (that reshored OEMs) produce, we’re going to get tonnage related to it. And it’s good tonnage. And, by the way, 14 years later we get scrap," he said.


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