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Once Made in China: Jobs Trickle Back to U.S. Plants

Wall Street Journal (05/22/12) James Hagerty

A growing trend over the past two years is the “reshoring” of some manufacturing work in the U.S. that was “offshored” to low-cost producers like China in the past two decades. After a 35% decline in the number of U.S. manufacturing jobs between 1998 and 2010, the number has since increased by 489,000, or 4.3%, to 11.9 million. While much of that increase is due to the economic recovery rather than reshoring, the economics research firm IHS Global Insight forecasts that the number of manufacturing jobs will climb 3.2% this year compared with a 1.6% increase in all jobs.

A survey of 105 companies by David Simchi-Levi, an engineering professor and supply-chain expert at the Massachusetts Institute of Technology, found that 39% were considering moving some manufacturing back to the U.S. Surging Asian wages over recent years have made U.S. manufacturing more attractive for some companies, as have higher oil prices that have increased the cost of shipping goods across oceans.

However, the U.S. suffers from a shortage of trained workers in some areas vital for manufacturing, such as engineering and operation of computerized machinery. U.S. corporate taxes are higher than those in most other industrial nations. “It’s not that there’s going to be a flood [of manufacturing] back to the U.S.,” says Daniel Meckstroth, chief economist at the Manufacturers Alliance for Productivity and Innovation. Rather, the U.S. is seeing more of a balance, in which companies more carefully assess the pros and cons of producing domestically or overseas, with Asia no longer the default choice.