Rebound in Domestic Manufacturing from Offshore Locations

July 31, 2012

'The U.S. and its manufacturing base is more competitive than at anytime in a generation,' according to a real estate industry research report.

Adrienne Selko

Through 2020, jobs will be coming back to the U.S. from offshore locations, according to a new report by CoreNet Global, an association of corporate real estate executives.

In a survey conducted in conjunction with the Corporate Real Estate 2020 research, 51% of corporate real estate asset managers either agreed or strongly agreed that there would be a rebound in domestic manufacturing from offshore locations. This recovery will be driven both by companies bringing manufacturing plants and jobs back to the U.S. or choosing not to off-shore in the first place, according to the report.

"On-shoring in the U.S. will continue to gain steam due to changing global cost and supply chain dynamics," said Dennis Donovan, principal with WDG Consulting. "The U.S. and its manufacturing base is more competitive than at anytime in a generation."

The trend is already occurring as U.S. manufacturing jobs have rebounded from a 10-year low of 11,458,000 in January 2010 to a projected 11,962,000 ending June 2012, according to the U.S. Bureau of Labor Statistics.

The 4.4% increase marks a gain of more than a half million new jobs.

"The labor cost arbitrage will likely diminish as a primary strategic driver as urbanization and industrialization trends in developing nations run their course," Chris Horblit, president of Fidelity Real Estate Co.

For example labor costs have been rising dramatically in China. In Southern China is at the point where it is at 20% of U.S. labor costs.

"Labor costs combined with ongoing security and quality concerns, as well as rising costs to transport goods and people, may well spark a marked turn to (on-shoring) by 2020," explained Horblit.

An additional factor, according to the research, is that manufacturing in the U.S. avoids a growing problem for major corporations operating in China and other developing markets - the lack of protection of intellectual property. Top executives from companies including GE, Microsoft, Kawasaki Heavy Industries, BASF and Siemens are among those firms that have criticized China for not safeguarding foreign companies' proprietary information, a failure that has cost these companies billions of dollars.

About the Author

Adrienne Selko | Senior Editor

Focus: Workforce, Talent

Follow Me on Twitter: @ASelkoIW

Bio: Adrienne Selko has written about many topics over the 17 years she has been with the publication and currently focuses on workforce development strategies. Previously Adrienne was in corporate communications at a medical manufacturing company as well as a large regional bank. She is the author of Do I Have to Wear Garlic Around My Neck? which made the Cleveland Plain Dealer's best sellers list. She is also a senior editor at Material Handling & Logistics and EHS Today.

Editorial mission statement: Manufacturing is the enviable position of creating products, processes and policies that solve the world’s problems. When the industry stepped up to manufacture what was necessary to combat the pandemic, it revealed its true nature. My goal is to showcase the sector’s ability to address a broad range of workforce issues including technology, training, diversity & inclusion, with a goal of enticing future generations to join this amazing sector.

Why I find manufacturing interesting: On my first day working for a company that made medical equipment such as MRIs, I toured the plant floor. On every wall was a photo of a person, mostly children. I asked my supervisor why this was the case and he said that the work we do at this company has saved these people’s lives. “We never forget how important our work is and everyone’s contribution to that.” From that moment on I was hooked on manufacturing.

I have talked with many people in this field who have transformed their own career development to assist others. For example, companies are hiring those with disabilities, those previously incarcerated and other talent pools that have been underutilized. I have talked with leaders who have brought out the best in their workforce, as well as employees doing their best work while doing good for the world.