More manufacturing jobs returned to the U.S. while manufacturing offshoring dropped off in 2016, according to a report from the Reshoring Initiative.
South Carolina is the state benefiting the most.
The report found that 51,468 manufacturing jobs reshored and 152 companies provided foreign direct investment in South Carolina between 2010 and 2016. Tennessee had the second-highest number of jobs at 36,109 while Georgia was third with 23,859. The South outpaced the rest of the nation in reshoring and foreign direct investment with 218,589 jobs and 838 companies providing foreign direct investment in manufacturing. It marked 67% of all reshoring and investment in the United States.
From 2000 to 2003, approximately 240,000 manufacturing jobs were offshored to foreign countries yearly across the country. Data from the Reshoring Library indicates only 50,000 were offshored in 2016, a drop of 500%.
In 2106, the library data calculated that 77,000 manufacturing jobs had been reshored, or returned to the United States, compared to an average 12,000 from 2000 to 2003, a 500% gain.
All told, the country went from losing an average of 220,000 manufacturing jobs each year to foreign markets from 2000-2003 to gaining 25,000 jobs in 2016.
“With 3 to 4 million manufacturing jobs still offshore, as measured by our $500 billion per year trade deficit, there is potential for much more growth,” said Harry Moser, founder and president of the Reshoring Initiative, in a news release.
The report found the top three industries reshoring jobs were transportation equipment, electrical equipment (appliances and components) and plastic/rubber products. A large percentage of reshoring is from China — approximately 60% — with Germany and Japan rounding out the top three.
Among the biggest reasons for companies reshoring or investing are:
- Government incentives
- Skilled workforce availability/training
- Proximity to customers/market
- Ecosystem synergies
Even with those positive factors, the negative offshore factors were found to be quality/rework, freight costs, total costs, delivery and inventory.
Offshoring and automation could bring issues beyond factor floor
According to a report from Ball State University, offshoring and automation could extend job losses to low wage earners and those with limited education.
The report “How Vulnerable Are American Communities to Automation, Trade and Urbanization?” found that occupations with a higher risk of automation have incomes less than $40,000.
“Automation is likely to replace half of all low-skilled jobs,” said Michael Hicks, director of Ball State’s Center for Business and Economic Research, in a news release. “Communities where people have lower levels of educational attainment and lower incomes are the most vulnerable to automation. Considerable labor market turbulence is likely in the coming generation.”
Of the top 25 counties in America at risk for automation replacing jobs, Allendale and Dillon counties were sixth and 12th, respectively. Nineteen of the 25 counties were located in the South. Aleutians East Borough in Alaska has the highest risk. Georgia had more counties (5) on the list than any other state while Alabama and Indiana (4) were right behind.
The top 10 automatable jobs were found to be: data entry, mathematical science professions, telemarketers, insurance underwriters, hand sewers, tax preparers, photographic process workers, library technicians and watch repairers.
“More worrisome is that there is considerable concentration of job loss risks across labor markets, educational attainment and earnings,” Hicks said. “This accrues across industries and is more pronounced across urban regions, where economies have concentrated all net new employment in the U.S. for a generation.”
No South Carolina counties made the top 25 list for offshoring risk. Indiana had seven counties at risk, the most of any state, while Tennessee and Mississippi each had three.
The top offshorable jobs included computer programmers, data entry, electrical, electronics and mechanical drafters and computer and information research scientists.
“We wish to reiterate that these are not predictions of job losses, but rather representations of the relative risk to automation and trade-related job losses that may occur in the coming years,” the report said.
The methodology of the study was to take the jobs ranked with the highest risk and use related county-level data to determine which counties had the highest risk in both automation and offshoring.
“We cannot know the pace or the depth of automation and offshoring, but it is clear that large swaths of the American economy are likely to face these changes,” Hicks said. “Both trade and automation-related economic growth are hallmarks of a vibrant economy. But the social and political unease that accompanies large shocks felt by the workers is real.”