Could some of President Obama's hoped-for 1 million manufacturing jobs come from reshoring? Maybe.

Posted by LDonia on 01/23/2013

Throughout 2012, reshoring was a hot topic. And, as with many hot issues, it tended to raise more questions than answers.

"Will the U.S. see a 'reshoring' manufacturing resurgence?" "Is reshoring yet a trend?" "Could reshoring be hindered by an ill-prepared workforce?" "Is reshoring yet on the rise?"

So it should come as no great surprise that barely three weeks into 2013, we're talking about reshoring again. (Did we ever really stop?)

In a recent outsourcing and offshoring special report, The Economist considered the possible return of manufacturing jobs. While the numbers look good (many of the firms that participate in the polls cited in the article plan to reshore at least some of their manufacturing), reshoring manufacturing jobs to the United States is still not a safe bet.

Why?

According to a survey conducted by Harvard Business School last year, many firms are still deciding against basing activities in America. Professors Michael Porter and Jan Rivkin asked HBS alumni who were running businesses about their choices of location and found that many of them were deciding to leave because they thought wages abroad were lower than at home. Another important reason, though, was to be near customers in big new markets, which this report does not see as offshoring in the conventional sense.

However, Porter and Rivkin argue that firms are now ready to reconsider offshoring. They realise that in many cases they overdid it, and are discovering hidden costs in moving production a long way from home. But, the authors argue, America’s government is not making the country’s business environment attractive enough for companies to want to come back.

What does this all mean?

Well, basically it means that we wait and see. It seems most companies know the pros and cons of reshoring and time will tell if these companies will head back to the states, or take a gamble on a low-cost country other than China, perhaps Cambodia or Myanmar.

Read The Economist's piece here.

 

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