Dayton Daily News: "Reshoring momentum building slowly Jobs still leaving U.S. at a fast clip."

December 30, 2014

Jobs are slowly coming back to Ohio from abroad after decades of offshoring that devastated the manufacturing industry and the middle class.

[by Steve Bennish | December 21, 2014 | Dayton Daily News]

It’s not clear yet when — or if — a tipping point will be reached when reshoring catches up to offshoring. But reshoring momentum appears to be building even as the U.S. imports vast quantities of manufactured goods from abroad, data obtained by this newspaper shows.

The Reshoring Initiative, a Chicago-based advocate for returning outsourced jobs to the U.S., compiled a list of 18 companies that returned 3,611 jobs from abroad to Ohio from 2007 through September of this year. Brand name companies include Heinz, General Electric and Whirlpool.

Still, jobs continue to leave through offshoring faster than they are coming back in, information from the U.S. Department of Labor shows. In 2013, 2,982 Ohio workers qualified for federal trade adjustment assistance, a program meant to assist displaced workers.

In other words, the number of jobs lost in one year nearly equaled the number cited by The Reshoring Initiative over nearly seven years. The national toll in 2013 was 104,158 displaced workers, the Labor statistics show.

Alan Tonelson, an independent economist and international trade expert, said the pace of reshoring remains difficult to determine.

“What we don’t know about reshoring on a company-by-company level dwarfs what we know,” he said. “Companies don’t always announce what they do. It’s reasonable to suppose these days companies are more anxious to announce reshoring moves than offshoring.”

A more reliable measure is manufacturing as a percentage of national Gross Domestic Product. That figure has hovered around 12 percent for years, Tonelson said. “More fundamentally, we need more manufacturing production,” he said.

Meanwhile, the Miami Valley has chalked up a handful of successes. The highest-profile one is Whirlpool’s announcement earlier this year that it would move KitchenAid mixer manufacturing to Greenville from China, adding 400 jobs to its operation.

The move garnered as much statewide attention as Ford Motor Co.’s announcement, also this year, that it would invest $168 million in an Avon Lake factory to move production of commercial F-650 and F-750 pickup trucks from a plant in Mexico. That move wasn’t expected to create jobs, although it would maintain 1,600 jobs already at the plant.

In West Chester Twp., Long-Stanton Manufacturing Co., a fabricator/assembler of custom-designed components for other manufacturers with operations in China, began reshoring in 2012. The company cited increased labor, transportation and raw material costs. Products representing 5 percent of Long-Stanton’s total sales have been reshored — components once made at Long-Stanton’s now closed Chinese factory.

Goodyear Tire and Rubber Co. said recently it would move 30 to 50 administrative jobs back to Akron from Brazil where they had been offshored.

Manufacturing has been ramping up here since the economy bottomed in 2009. According to the Dayton Development Coalition, which tracks a 14-county southwest Ohio region, the manufacturing sector has added 10,000 jobs since then, going from 108,369 to 118,186 by this year. The largest chunk, 3,200, was in machinery manufacturing.

Meanwhile, a quieter trend is in place locally. Following the 2011 tsunami that hit Japan and severely disrupted the auto supply chain, Ohio suppliers to the Japanese auto assembly plants began adding jobs and production. The thinking is that putting auto parts supply shops closer to assembly reduces the chances of another breakdown, said Dave Burrows, vice president of the Dayton Development Coalition.

“Smaller manufacturers in the auto supply chain — a lot of that has come back because of the tidal wave,” Burrows said. “Relocating assembly and machining of parts.”

Matt Englehart of JobsOhio, the state’s privatized economic development arm, said reshoring wins showed up this year in furniture assembly and in high-tech auto parts. Sauder Woodworking Company in Archbold in Fulton County moved 150 jobs here from abroad and Amanda Bent Bolt Co., in Hocking County moved 20 jobs to Ohio.

To date in 2014, JobsOhio worked on seven projects with a reshoring component. The projects are projected to create 374 jobs and nearly $45 million in capital investment, Englehart said.

Global strategy consulting firm A.T. Kearney last week released its assessment via its own “Reshoring Index,” meant to show the rate and pace of the return of manufacturing operations to the U.S.

It said the index shows a year-over-year decline from 2013 as offshoring outpaces reshoring. While the reshoring trend has improved the mood of U.S. manufacturing since the recession, the import value of manufactured goods into the U.S. from 14 low-cost Asian countries has grown at an average of 8 percent per year in the last five years, Pramod Gupta, a study co-author, said.

Kearney said it’s following 700 reshoring cases announced nationwide in the past five years. There have been 116 reshorings already this year. Between 2009 and 2013, domestic manufacturing gross output grew by an average compound rate of nearly 6 percent, shy of the import growth.

Kearney said the top three reshoring industries are electrical equipment, appliance and component manufacturing. Following that are transportation equipment manufacturing and apparel manufacturing, which previously had not been expected ever to come back.

The apparel industry was a standout, Kearney said. Between 2011 and 2012, the value of offshore apparel imports decreased by $845 million, while U.S. manufacturing gross output for apparel increased by $640 million.

“While there has been an overall lift in U.S. manufacturing for five straight years since 2009, imports of offshored manufactured goods into the U.S. have increased at a faster rate than any return of manufacturing operations to our soil and, for the 14 top offshoring locations combined, amounted to $630 billion in 2013,” the study said.

Those 14 top offshoring locations include China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lanka, and Cambodia.

Harry Moser of the Reshoring Initiative says the study itself shows reshoring momentum is building, even though some figures are lagging. Reshoring companies numbered 104 in 2012, but hit around 300 in 2014, Kearney said.

“It took 60 years to develop the offshoring, starting with Japan,” Moser said. “Reshoring will not come back in a year. It will take decades to bring it back.”

For Robert E. Scott, a trade expert at the Economic Policy Institute in Washington, D.C., an advocate for domestic manufacturing, it boils down to the size of the $600 billion annual trade deficit. Scott advocates for national policy to crack down on foreign currency manipulation, toughen fair trade law, and boost investment in manufacturing training.

“Since 1998 we lost 60,000 factories in the U.S., the biggest factories with 5,000 and 10,000 workers,” Scott said. “The reshorings are smaller factories — not anything like what we lost with the offshoring. You have to see the woods through the trees.”

Many economists believe that the best indicator of progress toward restoring industry lost to offshoring is the degree to which manufacturing contributes to U.S. Gross Domestic Product. As a percent of GDP, manufacturing has hovered at around 12 percent for many years.
2005 - 12.48%

2006 - 12.76

2007 - 12.94

2008 - 12.60

2009 - 11.98

2010 - 12.30

2011 - 12.14

2012 - 11.95

2013 - 11.86

1Q 2014 - 11.97

2Q 14 - 12.03

Source: U.S. Census and Alan Tonelson.

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