The United States is currently experiencing its largest reshoring surge in history, according to two recent reports. A projected 350,000 jobs are set to return to the country by the end of the year, far surpassing last year’s record total of 260,000.
The increase in reshoring began in response to the COVID-19 pandemic in 2020, which greatly affected the global supply chain. Russia’s invasion of Ukraine in February has also exacerbated the problem, and the recent increase in tensions between China and Taiwan has also been a large factor.
79 percent of CEOs who have operations in China have either already begun moving them back to the US or plan to do so by the middle of the decade, with another 15 percent in the process of evaluating the process of moving. However, 22 percent of senior manufacturing executives said they are not considering reshoring operations.
Lawmakers in Congress also just recently passed the Chips and Science Act and the Inflation Reduction Act, which are aimed at persuading companies to reshore and invest in domestic manufacturing by offering them various incentives such as tax breaks.
Rising consumer demand during the pandemic could not keep up with supply chain issues, which also caused many CEOs to consider switching to robots sooner than originally planned. With high inflation continuing to be a problem, those same companies could likely experience a worker shortage if they fail to meet increased labor demands, providing them with an excuse to hasten the automation process.
The Association for Advancing Automation recently reported a 67 percent increase in orders for automotive technologies between 2020 and 2021. Over half of that demand was from industries that manufacture plastics, semiconductors, electronics, metals, food, and other consumer goods. The rate at which this automation will occur will determine the effect it will have on replacing many of the returned jobs along with many others.
With consumer demand growing at the same time as global supply chains were struggling to keep up, manufacturers started to invest more in robotics and other automation in their domestic operations to improve cost efficiency and overcome labor and skills availability challenges.
Automotive companies have a long history of investing in robotics, but they aren’t the only industry using technology to compensate for labor.
The Kearney Report also shows that 70 percent of CEOs who are reshoring have already planned, are considering, or will be nearshoring part of their manufacturing operations to Mexico. The top five factors cited as reasons were labor cost, labor availability, quality of the goods that are produced, delivery lead-time, and logistical costs. Nearshoring to Mexico will eliminate many trade obstacles that developed throughout the pandemic. However, it also means that US citizens are losing out on employment opportunities.
One corporation that will be one of the largest contributors to the projected job growth is Walmart, which recently announced a $350 billion initiative aimed at returning manufacturing jobs to the county, which will likely result in approximately 750,000 sustainable jobs over the next ten years.