Learn Why Some Companies are Bringing Jobs Back to the U.S.: Will This "Onshoring" Trend Last?

Learn Why Some Companies are Bringing Jobs Back to the U.S.: Will This "Onshoring" Trend Last?
Page content

Some American companies are finding it financially profitable to bring back tech and manufacturing jobs to the U.S; larger corporations are taking the lead. There are benefits to domestic hiring that include easier logistics and the optimism of “Made in America.” But there are also challenges, like re-educating the work force. Is there really a future for American-based production?

The Financial Advantages

Companies like GE, Apple and Lenovo are moving some manufacturing plants back to the U.S. from China and they claim it’s not about promoting “Made in America” pride. It’s a financial decision.

According to Linda Mayer, president and CEO of SCHOTT, North America, wages in China have increased 500% since 2000 and they continue to increase at 18% per year. Oil prices have also tripled since 2000, effecting shipping and travel costs. By comparison, natural gas prices in the U.S. have actually fallen. Shipping and traveling to the Far East and India are no longer a bargain. Also, so much attention has been paid to the deplorable working conditions in China companies are paying out more than ever before for public relations help.

Film and television production companies had been choosing locations in places like South America, Brazil, Mexico and Canada because they provide lower daily expenses, labor is cheaper and those areas offer excellent tax incentives and other financial benefits. However, some states like New York have recently begun to offer many of these financial incentives as well, so production in the U.S. has increased in the last few years as well.

“I work with a lot of foreign production companies that need to shoot in the U.S. for a specific location ‘look.’ But I also work with U.S. production companies that seem to think shooting overseas—anywhere but in the U.S.—would be so much cheaper. But, in many instances, we haven’t found that to be the case,” says Paul Van Wormer, who runs Van Wormer International, a film/video/live event production company that helps foreign companies with U.S. productions. “We’ve shot overseas and by the time I’ve taken care of shipping equipment, housing for cast and crew and other unexpected expenses, I don’t save a lot of money. Unless you need specific locations in that foreign country, it is just much easier for everyone to stay here and shoot in the U.S.A.”

Up to now, according to John Williams, Senior Vice President of Collaborative Consulting, it’s estimated that nearly one million formerly U.S. IT jobs moved over seas. “There was also a severe resource shortage in the U.S. because of the boom in demand driven by Y2K, the .com bubble, and the broad adoption of Enterprise Resource Planning (ERP) packages,” writes Williams in TechRepublic. “India, and eventually other markets, seemed to be the answer to both issues.”

But this is all changing. According to Williams, companies that invested in overseas talent have had problems with turnover rates, IT security, and language/communication barriers. Plus, companies have slowly learned that when they add up the costs associated with manufacturing overseas, they might as well pay American workers those union wages.

Is the U.S. Ready for These Jobs?

430 4080184

To bring these jobs back to the U.S., though, companies in the U.S. have to make big changes. As stated in the article Closing the Skills Gap, there are problems with basic skills. “I can’t tell you how many people even coming out of higher ed with degrees who can’t put a sentence together without a major grammatical error. It’s a problem,” says American company owner Karl Hutter.

Pulling manufacturing jobs back to the U.S. means re-training American workers on new technology and state-of-the-art machines—and making sure they can conduct business properly. Companies have to be willing to invest the time and money that it takes to get workers up to speed if American companies are going to compete globally. This is a big shift from decades ago.

To answer this challenge, American companies have begun partnering with colleges and universities to provide programs that will give graduates the skills they need to join this growing workforce. One of the people helping to promote this is Mike Rowe and his WORKS Foundation.

All of this is great news for American workers. It could also be great news for American companies if they are willing to make the investment of staff, time and money required for this big transition. If this transition succeeds, American companies would be employing the millions of Americans who are currently out of work. It could be a win-win situation. And then “Made in America” would not just be a slogan.