Continuous supply chain disruptions which started during the pandemic and have been intensified by the war in Ukraine—and an ongoing economic decoupling of the US and China—have generated a flood of manufacturing jobs reshoring to the US.
Reshoring is on track to create more manufacturing jobs in the US than foreign direct investment for the third year in a row in 2022. The wave of manufacturing jobs from reshoring is projected to crest at 400,000 jobs by the end of the year, a 35% increase of 2021’s total of 261K.
Unfortunately for the US, the labor shortage that is afflicting the nation from coast to coast is putting a ceiling on the number of overseas manufacturing jobs we have the capacity to absorb.
“Capacity limits, especially its workforce, will limit the reshoring of manufacturing jobs to an average of between 250,000 to 500,000 jobs per year maximum,” Harry Moser, Founder and President of the Reshoring Initiative, told GlobeSt.com.
Moser, a frequent visitor to the White House whose organization has been campaigning for the reshoring of manufacturing jobs to the US for a dozen years, estimates the potential total of manufacturing jobs that could be repatriated at 5M.
Michigan benefited the most from reshoring of manufacturing in 2021, netting more than 17,299 jobs, by Texas (15,026), Tennessee (13,649), Arizona (11,273) and North Carolina (9,150) in the top five, according to a Reshoring Initiative survey .
The survey showed that transportation equipment manufacturing jobs, including EV battery production, represented about 19% of the reshoring total in 2021, followed by semiconductors and electronic parts at 17%, electrical equipment/appliances and chemicals, both at 14%, and medical equipment and supplies at 11%.
Nearly half of the reshoring jobs have come to the US from China. Manufacturing jobs are also coming back to the US from Mexico and Canada as manufacturers strive to reduce their transportation costs.
Moser told us he believes that the decoupling of the US and Chinese imports and the migration of supply chain back to the US from China is a permanent shift.
While the pandemic underlined the need for the movement of critical supply chains back to the US, Moser said rising geopolitical tensions between the US and China—as well as the 25% tariffs levied by the Trump Administration—are accelerating the reshoring trend.
“The risk of China decoupling voluntarily or being decoupled due to a Taiwan incident is having a greater impact than the tariffs. Companies can swallow some of the 25% (tariffs), but they can’t survive being totally cut off,” Moser said.
Moser opposes the lifting of US tariffs on China, which President Biden reportedly is considering as part of a plan to inflation, because the tariffs are prodding more companies to join the reshoring wave.
Regarding the labor shortage, Moser said the US needs to do a much better job recruiting and training new workers for manufacturing jobs.
“The quality of the training, compared to a country like Germany, is worse than the quantity problem,” Moser told GlobeSt.com.
If the pace of reshoring of manufacturing jobs continues to boom and the labor shortage persists, it could take more than two decades for the US to absorb the millions of jobs that come home, he said, adding that the labor shortage is a global problem that also is afflicting our global competitors.
“The labor shortage is worldwide, including in China, and the situation in the rest of the world is getting worse,” Moser said.