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 even.
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. market.
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 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. 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 of that.
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 officer.
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.