Home » NEWS » Manufacturing » Sometimes it’s better to receive — U.S. gaining more China jobs than it’s losing

Sometimes it’s better to receive — U.S. gaining more China jobs than it’s losing

jobsBy TED CARTER

The newest assessment of the movement of jobs and investment back to the United States from oversees shows 2014 continued to tilt the jobs competition in the U.S.’s favor.

But the United States is still three million to four million jobs short of regaining the number lost since the emergence of Asia, China in particular, as industrial giants.

Looking at net gain for the year, the United States saw 10,000 more manufacturing jobs either return or materialize through foreign direct investment, or FDI, according to the 2014 Data Report from the Reshoring Initiative, a Chicago-based clearinghouse for reports and other information on reshoring of American manufacturing and FDI.

The report identifies U.S. jobs created both through reshoring and foreign direct investment. While the report defines reshoring as a balance between high and low-tech jobs, it identifies FDI as stronger in high tech. The high tech company backed by foreign investment can typically provide larger projects and gain more incentives from states competing for the projects.

The data reports put the retrieval of jobs from off-shore at 60,000, while estimating that 30,000 to 50,000 jobs went overseas. That’s a far cry, the Reshoring Initiative report said, from the 140,000 net loss on 2003.

In the years since, manufacturers have changed their strategic preferences. This came as automation improved and government incentives and skilled workers became more plentiful in the United States, especially the Southeast and Texas.

Adding to the tilting: Currency exchange rates and energy costs that run 50 percent to 200 percent higher than those of the United States.

A premium put on the “Made in USA” label further contributed, as did a sagging quality of Chinese-made products and the long lead times U.S. manufacturers must give China’s factory operators.

Those downsides occurred at the same time freight costs began rising and Chinese factory wages climbed to within 10 percent to 15 percent of wages in some U.S. manufacturing centers.

Another sign of a shift in strategic preferences comes from the 8,000 or so jobs that stayed put though deemed in danger of going off shore.

Mississippi finished 16th among the states in jobs gained from overseas, adding 598 of the jobs through five reshored operations. South Carolina topped the reshoring list, with 7,530 jobs through eight companies, followed by Texas with 3,792 jobs from 13 companies.

Data for the report came from the Reshoring Initiative’s library of more than 2,000 articles, privately submitted case studies and other privately documented cases, the organization said.

Transportation equipment, electrical equipment and appliances topped the reshoring list for U.S. sectors; transportation equipment, fabricated metal products and plastic/rubber products led the direct foreign investment list.

Half of all 2014 reshored jobs came from China, with Mexico. India and Japan as the other leading contributors.

Germany’s auto manufacturing and international conglomerate Siemens make it the top country for foreign direct investment in U.S. manufacturing. China is second.

The Asian country’s “strong presence is consistent with the reshoring trend from China since reshoring and FDI are driven by the same financial advantages of producing in the market,” the Reshoring Initiative’s report concluded.

The report comes just days after the Boston Consulting Group’s third annual survey of U.S. manufacturing executives reported that America has displaced China and Mexico as the most likely destination for companies that are shifting manufacturing capacity to serve the U.S. market.

The Boston Consulting Group predicted in its initial survey that 2015 would be the “convergence” year by which China’s total manufacturing costs – before transportation – would come within the low double digits in percentage of converging with U.S. costs. The new survey finds the gap has closed significantly but makes no mention of reaching the convergence.

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