There has been some talk of a
rebound in U.S. manufacturing, especially when it comes to
reversing or stemming the trend of jobs moving overseas.
American companies 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. Were not saying offshoring
has stopped, but ... reshoring has started, he told
AMM in May. 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
A number of original equipment
manufacturers (OEMs) have brought jobs back Stateside 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. 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.
In total, 50,000
manufacturing jobs have been brought back to the United States
out of a total of 500,000 manufacturing jobs 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
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. Were 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 theyre here. So
all these costs when they export here--all this travel (freight
charges, export fees)--the local manufacturers have almost none
Steel Manufacturers Association
president Thomas A. Danjczek said 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, were going to
get tonnage related to it. And its good tonnage. And, by
the way, 14 years later we get scrap, he said.
Similarly, the U.S.
manufacturing sector has undergone a remarkable
transformation in recent years, the Alliance for American
Manufacturing (AAM) said in its five-year progress report
released this spring.
The country has gained 500,000
new manufacturing jobs since 2010, rebounding from a decade in
which the sector shed one-third of its workers, it said.
Entering 2013, Made in America is back, five years in the
making, the AAM said. Tens of thousands of miles,
dozens of town hall meetings, and polls, studies, books and
ideas reshaped the manufacturing policy debate.
The group noted several positive
developments: The President has set a goal to create 1 million
new manufacturing jobs by 2016, House Democrats have launched a
Make it in America plan, 30 statehouses are now
considering Buy America legislation and the term
reshoring has entered the lexicon.
National leaders, think
tanks, academia and management consultants are engaged in a
competition of ideas on how to restore Americas
manufacturing leadership, which they all agree is
essential, the group said.
But despite the achievements to
date, more remains to be done, the AAM said. In its
Blueprint for the Future, the group called for the
creation of a national infrastructure bank, the passage of a
robust transportation bill, the strict enforcement of
international trade rules and the expansion of tax credits for
clean energy and research and development, among others.
Those looking at more
steel-specific industries agree. For example, the U.S. pipe
industry is set to benefit from growing natural gas demand,
according to Joel Johnson, who this spring joined OMK Tube
Inc., a newly created division of Moscow-based pipe producer
United Metallurgical Co., as president and chief executive
The reshoring of manufacturing is one factor likely to
increase demand, Johnson said at the National Association of
Steel Pipe Distributors annual convention earlier this
year, when he was senior vice president of sales and marketing
for the Americas at Houston-based Welspun Global Trade LLC.
Theres a lot of manufacturing, due to the low
energy prices, thats moving back to the U.S., he
said. At the same time, gas is supplanting more-expensive coal
as an energy source. Due to the low gas prices, (coal)
doesnt make sense.