Reshoring Rose Significantly in 2020, Report Finds
During the COVID-19 pandemic, the U.S. found itself unexpectedly facing down a global pandemic it was not materially supplied for. Shortages of PPE and medical technology pushed 3M protective mask operations into the headlines, and country-wide shutdowns led many to question the wisdom of complex international supply chains.
That questioning has already begun to bear fruit, according to The Reshoring Initiative, which released its 2020 Data Report June 2. More jobs were created in the U.S. thanks to reshoring in 2020 than were created by foreign direct investment, the report says, the first time that’s happened since 2013. Reshoring created about 109,000 U.S. jobs out of about 161,000 total jobs created from reshoring and foreign direct investment in 2020.
That’s a notable increase from 2019, which saw 109,918 such jobs created. Last year’s numbers push the cumulative number of jobs created from reshoring and FDI since 2010 to over a million jobs.
“The high rate of 2020 reshoring vs. FDI … indicates that U.S. headquartered companies are starting to understand the same benefit to U.S. production that foreign companies have understood over the last decade,” the report says.
The most common reasons cited by reshoring companies in the report for their decision to bring jobs back to the U.S. was the positive domestic factor “proximity to customers/market,” which 1,367 companies cited. “Government incentives” was the second-most popular reason, and just over a thousand companies said they returned to the U.S. to seek available skilled workers. The most-cited negative factor for reshoring was quality of goods, cited 359 times.
The transportation equipment industry created 29,000 jobs, down significantly from 2019, when it made 38,000, but the other three top industries all made significantly more U.S. jobs from reshoring and FDI in 2020 than in 2019. Medical equipment and supplies, the second-largest job creation group, made 21,000 new U.S. jobs in 2020 compared to only 3,000 the year before. Similarly, the chemicals industry relocated or invested in 20,000 new U.S. jobs versus 3,000 in 2018, and electrical equipment jobs leapt 5,500 in 2019 to slightly under 20,000 in 2020.
Harry Moser, President of the Reshoring Initiative, said in a statement the current growth was only the beginning. “With 5 million manufacturing jobs still offshore, as measured by our $900 billion/year goods trade deficit, there is potential for much more growth,” he said, and called on Congress and the Biden Administration to make the U.S. more competitive.