Regulatory Concerns
Companies are also assessing U.S. government's potential initiatives around creating manufacturing incentives. The government is under pressure to provide non-deficit producing initiatives to make the climate for domestic manufacturing, and reshoring, more attractive. Easing the regulatory burden on manufacturers and simplifying the tax code to provide incentive for capital equipment will provide a clear and predictable outlook for companies that are considering reshoring and those that are currently hesitating or evaluating their options, and also level the playing field where companies are competing with offshore manufacturers.
Present State of Industry
Although manufacturing employment levels have declined for nearly a decade, American manufacturing had its best year ever in 2011, with $600 billion in profits. This measure of success is rooted in a deeper transformation -- American manufacturing is more efficient, productive and automated than ever before. Before the current recession, manufacturers have reengineered, rethought, and reinvented their processes. Clearly, the importance of manufacturing is not discounted in today’s economy, but supported. In the U.S. and other countries like Japan, Germany and Canada, highly skilled jobs are created when high value products are produced, whether they are niche products or simply those that meet demand for the highest grade and quality. Bringing manufacturing back to the U.S. is a wise move for companies seeking access to lean, innovative, efficient and automated processes that will drive their profitability.
U.S. manufacturers have enjoyed the benefits of offshore production for years but now realize that with its advantages come unforeseen risks. Offshoring has not caused the massive U.S. trade deficit and the decline of U.S. manufacturing over the past several decades but nevertheless, has contributed to it. Domestic suppliers have watched as large manufacturers have offshored work and well-paying jobs. Offshoring ultimately contributes to waste and instability. Reshoring strengthens the U.S. economy, is an efficient way to reduce imports, increase exports and regain manufacturing jobs in the United States.
Chris Coghlin is CEO of Coghlin Companies.
