Source: Blog – Alliance for American Manufacturing

Craftsman, which is now owned by Stanley Black & Decker, is among the brands that have reshored production to the United States in recent years. There are now Craftsman factories in several states. Photo courtesy Craftsman

“One bright silver lining to the pandemic is the broad public and corporate realization and acknowledgement of the need to shorten supply chains and produce goods at home,” reads a recent report released by Reshoring Initiative.  

One thing the COVID-19 pandemic caused many Americans to realize is that the United States is far too dependent on foreign markets for critical goods, like PPE and semiconductor chips. But it also led to a question: Would this realization actually lead to any changes, or would business continue as usual?

It now appears we have an answer.

A recent report released by Reshoring Initiative finds that the private sector did begin moving operations back to the United States as a result of the pandemic. Titled “Reshoring Initiative 2020 Data Report,” the study finds that reshoring – a.k.a., moving foreign production and manufacturing operations back to the U.S. – was way up in 2020. 

So much so, in fact, that the data collected outpaced numbers that had been projected based on previous years’ trends. The Reshoring Initiative had projected 2020 reshoring and foreign direct investment jobs to be at about 110,000 in 2020. The actual number ended up over 160,000 jobs.

Perhaps what is most exciting about this discovery is that the surge in reshoring is expected to continue in 2021.  

The unexpectedly high rate of reshoring means that “U.S. headquartered companies are starting to understand the same benefit to U.S. production” that we here at the Alliance for American Manufacturing have asserted for years.  

And while we would like to take some credit for the shift in mentality, the role that the pandemic played cannot be understated. “Not surprisingly, the largest shifts in [the reason companies gave for moving operations back to the U.S.] in 2020 were pandemic related. Covid-19 itself was the #1 cited factor in 2020,” according to the report. 

This has been doubly true in the past year for companies that deal with “essential products of which the U.S. relies too heavily on imports, such as PPE, pharmaceuticals, rare earths, semiconductors and electric batteries.” 

The past year has shown that the U.S. cannot be completely reliant on foreign manufacturers for these essential products. The report details how companies that used to manufacture abroad that have since moved operations back to America, cited supply chain disruption, loss of control, and strained offshore relationships as major reasons for the shift. By reducing the distance between their production operations and their consumer base in the United States, these companies have reduced the risks posed by foreign manufacturing.  

Not only has this shift benefitted companies, American workers have also benefitted significantly. Reshoring alone resulted in 109,000 jobs announced in 2020. To break that figure down by state, “in 2020, California, Texas, and North Carolina led in number of jobs announced.” 

As for where these jobs came from, Reshoring Initiative’s report found “China as the source of 46% of reshoring,” spanning 2010 and 2020. What’s more, the organization suspects “the actual number of jobs returning from China is even greater, because companies don’t want to report/advertise that fact for fear of retaliation.” 

It’s good to see that the attitude from the private sector about the benefits of domestic manufacturing has shifted dramatically since 2010. Recent initiatives undertaken by the Biden administration and Congress also could help spur even more.

“The surge [in companies’ plans to reshore] will be accelerated by President Biden’s American Jobs Plan, Supply Chain Order and Buy American Order,” the Reshoring Initiative asserts in the report. “The market demand and government focus on U.S. self-sufficiency in EV batteries, rare earth minerals, pharmaceuticals, PPE and semiconductors alone will result in 10,000s of jobs announced.” 

As a sign of this, right now, “two in three (69%) manufacturing companies are looking into bringing production to North America (compared to 54% in February).” 

That means that over the next year or so, more companies may bring operations to the U.S. In other words, more good-paying manufacturing jobs for Americans.  

While all of this is exciting, it is important to remember is that these changes did not happen on their own. While the COVID-19 pandemic definitely influenced companies to reevaluate their offshore manufacturing operations, the Reshoring Initiative notes that the “acceleration of [reshoring] depends on the government leveling the playing field, [and] making the United States more…competitive.” 

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