Higher-tech industries represent lion’s share of employment opportunities with 65% of the total jobs created
SARASOTA, Fla. — A recent report from the Reshoring Initiative shows that reshoring and foreign direct investments represent about 180,000 jobs coming back to the U.S. in the first half of this year. Based on this rate of job growth across 807 individual cases, the report suggests that there will be nearly 366,000 jobs in total for the entire year, across 1,614 individual examples of companies expanding in North America.
Of the total jobs announced, reshoring represents about 59% of the total jobs with FDI accounting for the balance at 41%.
Electrical equipment, appliances and components — including EV batteries — was the No. 1 driver of that growth with 148,948 jobs announced, or 41% of the total. Next was computer and electronic products, driven by computer chips and solar panels with 84,484 jobs created, or 24% of the total, followed by chemicals, with 49,795 jobs, or 14% of the total, and transportation equipment with 41,704 jobs or 11% of the total.
From there, the numbers decline significantly, with reshoring and FDI investments in machinery manufacturing creating 12,428 jobs or 3% of the total; plastic and rubber products generating 6,405 of the jobs, or 2% of the total; primary metal products at 4,830 jobs or 1% of the total; furniture and related products with 4,798 jobs or 1% of the total; apparel and textiles, creating 2,838 jobs and 1% of the total; and medical equipment and supplies with 2,129 jobs or 1% of the total.
In order, the next five areas included in the report were fabricated metal products; nonmetal mineral products; food and beverage and castings/foundries. Wood and paper products, which could also be tied to furniture, were last on the list, with an estimated 900 jobs created.
The Top 10 states for nearshoring in the first half included Kentucky with 14% of the total jobs, Georgia with 10% of the jobs, South Carolina with 9% of the jobs, North Carolina and Ohio with 6% of the jobs respectively, Nevada and Kansas with 5% of the jobs each and Indiana, Illinois and Massachusetts with 4% of the jobs respectively.
In order, some of the top factors cited for moving manufacturing back to the U.S. include government incentives, good local supply chains, proximity to the market, the availability of labor or a skilled workforce, infrastructure and less risk of supply chain interruption. Other factors cited include manufacturing/engineering/R&D innovation, underutilized capacity, lower lead times, impact on the brand or company image and impact on the domestic economy.
Nearshoring of jobs to neighboring Mexico or Canada also rose, with most of the jobs going to Mexico versus Canada. Citing Census Bureau data, the report said that Mexico overtook China as America’s largest trading partner earlier this year, with total bilateral trade between the two countries totaling $263 billion in the first four months of the year.
Of course, much of the shift to domestic production in the furniture industry in recent years — be it reshoring or nearshoring — had to do with the disruption in the supply chain caused during the pandemic, ranging from high container costs to severely limited container availability.
Citing Bloomberg, a recent bulletin by TD Cowen noted that while container rates rose 1% on the West Coast and 8% on the East Coast to $1,573 and $2,383 respectively through November, this is well below pandemic highs of more than $20,000 or more per container.
“New builds should bring another 9% increase in ocean capacity, and the ocean recovery is now likely a 2025 story, as the “great unwind” riddles ocean carriers and forwarders with excess capacity,” TD Cowen noted.
Thus, the shift in lower container costs alone has made Asia popular once again, although many companies remain entrenched in Mexico either through sourcing relationships or dedicated production.
The same is true of U.S. producers that remain in places like North Carolina, Mississippi and Virginia particularly with upholstery production.
A key benefit? Proximity to the marketplace that places production closer to retail customers and consumers alike, particularly as lead times have come down to near normal levels.
Other key takeaways from the report are as follows:
+ Geopolitical disruptions are causing companies to reevaluate supply chain priorities. The war in Ukraine, the Israeli/Hamas conflict and increasing tension over Taiwan show that it is past time for companies to evaluate reshoring and nearshoring as insurance against catastrophic disruptions, the report said.
+ The Reshoring Initiative report also noted that its user data indicates that 20% to 30% of what is now imported from China can be sourced domestically at equal or greater profitability.
+ In the first quarter of this year, average spending on U.S. factory construction was more than double the average from the past 17 years, the report said, adding that independently conducted surveys on reshoring actions by U.S. companies also correlate closely with Reshoring Initiative data on jobs announced over the past 12 years.
+ The cumulative number of jobs that have been brought back since a low point in 2010 is projected to be near 2 million by year end, or about 40% of what was lost to offshoring prior to 2010. The report said that it took 11 years to return to the first million jobs and three years to return to the second million.