TD Economics Report Heralds Revival of American Manufacturing Sector Through Reduced Offshoring of Jobs
PORTLAND, ME and CHERRY HILL, NJ-- TD Economics—an affiliate of TD Bank—released a special report crediting the revival of the U.S. manufacturing sector as a key driver in the economic recovery, largely due to a slowdown in offshoring activity. This slowdown has kept some of the jobs in the United States that used to be rapidly offshored, especially ones in relatively capital-intensive industries such as computers and electronics; machinery; fabricated metals and plastics and rubber, accounting for about one-quarter of the 200,000 manufacturing jobs added over the last 12 months.
The report indicates that since the trough occurring in January of 2010, the manufacturing sector has added nearly 500,000 jobs, in part due to the deceleration of shipping jobs overseas. The drivers behind the deceleration result from a unique combination of dynamic global and domestic conditions.
On the global scale, offshore wages have risen rapidly, while an appreciating renminbi and volatile transportation rates have weakened offshoring's cost advantages. Domestically, existing intellectual property protection, flexibility arising from tighter supply chains, a trend toward mass-customization and access to natural gas energy from shale formations have begun to tip the manufacturing scales back in the favor of the United States
"Even though manufacturing has shed jobs in the past two months, it does not detract from the remarkable upswing that has been underway since the Great Recession ended,” says Michael Dolega, the TD Economist who authored the study. “This resurgence has bucked a trend that has been in place for more than a decade allowing manufacturing jobs to be a key driver of the economic recovery. We believe that capital-intensive manufacturing industries will lead this onshoring trend, while labor-intensive industries such as apparel and textiles will remain, or perhaps be pushed even further, offshore."
The report cautions that en masse industry onshoring isn't likely to occur, nor will the trend replace the nearly six million jobs lost to offshoring since the peak in the mid-2000s. Also of note is that new manufacturing jobs will require less labor-intensive, but more high-skill, highly-productive positions in which the United States has a competitive advantage.
To view the full report, please visit: http://www.td.com/document/PDF/economics/special/md1012_onshoring.pdf