After years of jobs being sent overseas to countries like China with inexpensive labor, the U.S. is on track to bring 350K of those jobs back home this year. That’s ten times the number of jobs that were reshored in 2010.
Companies like GE Appliances, Stanley Black & Decker, and Caterpillar have each announced about 2,000 jobs returning this year. Foreign companies like Honda and LG Energy have announced plans to build brand new factories in the US.
The reasons behind this reversal are as follows.
1 – The pandemic showed companies that their just-in-time inventory supply chains weren’t capable of handling a major shock to the system.
2 – The War in Ukraine, tensions between China and Taiwan, and the increasing difficulties with drought conditions have halted many supply chains.
3 – The costs of shipping have increased with higher energy costs and the US / China trade war and tariffs.
4 – The Chips and Science Act as well as the Inflation Reduction Act are providing additional tax breaks and credits for companies to build and invest in America.
Billions have already been pledged for companies to build EV vehicles, batteries, semiconductors, and manufacturing equipment this year. This will be a boon for the economy as foreign and domestic companies bring their manufacturing operations back onshore.
Let me leave you with this.
Before any of our union friends get too excited, it should be noted that the majority of manufacturing facilities are being built with a large robotic component. Over 12,000 robots were sold in the second quarter of this year, which was a record high for the third quarter in a row.
Manufacturing is changing from being completely labor intensive to workers helping the machines.
No matter how you look at it, this is great news for our struggling economy. It means that larger companies are doing something to hold down their costs that will in turn help tame inflation.