The 'offshoring' movement had a profound deleterious effect on
the U.S. job market. Entire industries such as electronics,
textiles, toys and shoes shifted to China. Consequently,
traditional blue collar manufacturing jobs dramatically shrank in
number. Employment in manufacturing declined from 32% of the
workforce to about 9% at present. The question then arises if
some of these jobs will return to the U.S.
If offshoring in manufacturing took jobs to China with its
superior supply chain management, modern infrastructure and
skilled labor, outsourcing in services worked in India's favor on
account of its English speaking population and prevalence of
Although still only a trickle, 'reshoring', of manufacturing
jobs is shifting some jobs back to the U.S. One survey by the
Boston Consulting Group reported that 37% of large American
employers were contemplating transfer of manufacturing from China
to the U.S. Local U.S-based production is gaining ground on
account of varied factors such as a lower logistics and inventory
buffer, weaker dollar, lower transport costs and cheaper energy
Further, with wages going up over 15% each year in China along
with stagnant pay in America, the wage differential is shrinking.
In any case, the share of labor in total manufacturing costs has
fallen to as low as 20% in some industries. In such a scenario,
low wages are not vital any more for manufacturing
While reshoring to manufacture small lots in America costs
more, the benefits are realized in the form of better response to
the consumer, real-time integration of inputs from R&D and
marketing, increased goodwill and positive publicity in America.
Then, many companies are fond of segmenting the market so that
they are able to service American buyers from the U.S. and meet
Asian requirements from its hub in China. The just-in-time
production model is in vogue.
It is estimated that well over two million total jobs may be
created in the U.S. over a period of time but many of these jobs
will need sophisticated skills. Low paid Chinese workers were
sought by American companies until robots operated by trained
American workers at
) East Peoria, Illinois plant were able to do the work for less.
The U.S. has evolved to become an advanced production hub in
other high profile cases as well. Foreign multinationals, such as
Airbus, Honda and Toyota have set up production facilities in
Reshoring is already under way with
) shifting some production back home.
) is slated to launch production of the Mac in the U.S. In a well
General Electric Company
) will create close to a 1,000 jobs in Kentucky where it will
manufacture water heating equipment.
With regard to services, again most of the mundane jobs which
could be offshored have already been exported leaving only the
cerebral output in the U.S. The reshoring phenomenon has not
taken off in services to the same extent, except for call centers
which are facing demise in India partly due to accent barriers.
Delta Air Lines Inc.
) recently transferred 2,000 call center positions from the IT
Capital, Bangalore to the U.S.
Reshoring is a trend whereby some of the lost jobs will drift
back to America. Companies are also beefing up their staffing in
the U.S. as a part of their normal business. Organizations such
as software giants
International Business Machines Corporation
Cognizant Technology Solutions Corporation
), who successfully compete with Indian software exporters
) and Tata Consultancy Services, will recruit thousands in places
like India while also increasing headcount in the USA.
In the end, companies doing business in America realise that
the 'Made in USA' tag holds immense consumer appeal, and not just
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