January 31, 2019

January eNewsletter

January 2019 E-News: Manufacturing Hiring Boomed in 2018, but Growth at Risk in 2019
 

Manufacturing jobs increased at historically high rates in December (32,000) and 2018 (284,000), impressive results given their arrival at the end of an economic cycle. Reshoring and FDI have been critical to this success, adding an estimated 130,000 jobs, about 46% of the 2018 total. Further positive manufacturing employment changes in 2019 will depend on the relative strength of the headwinds and tailwinds driving the reshoring trend.

Tailwinds:

  • The 2018 cuts to taxes and regulations
  • Lower U.S. dollar soon due to reduced expectations of Fed interest rate hikes
  • Government starting to enable reshoring
  • Work coming out of China due to trade war effects and workforce shortage/wage increases
  • Increased shipping costs

Headwinds:

  • Uncertainty due to China, steel/aluminum tariffs and dysfunction in Washington, D.C.
  • Skilled workforce shortages
  • Higher US dollar now
  • Risk of reversal of corporate tax cuts

Some of these factors are covered in the articles below.

In the News
 

Work is shifting out of China: The Wall Street Journal reports, “For many U.S. companies, the decision to move manufacturing elsewhere was the right move even before the latest trade squabble.” So far, most of the shifts are to Southeast Asia, India and Mexico. Now is the time for the U.S. to level the playing field and for U.S. suppliers to up their game and win more of the work - before more work settles into low-labor-cost countries.

The impending worker shortage in China is almost here and it will drive labor prices higher, adding to the total cost of producing in China. From Stratfor Worldview: “Chinese society is on the verge of a structural transformation even more profound than the long and painful project of economic rebalancing…” See the compelling implications on our blog.

Shipping costs expected to rise: The International Maritime Organization plans to enforce reduced emissions, costing the shipping industry an estimated $60 billion/year.

The dollar is the strongest it’s been in 30 years. The price of Big Macs in different countries is used by The Economist as a lighthearted barometer of the dollar’s strength. The high dollar is a major driver of the trade deficit. The U.S. can become more competitive by pursuing a moderately lower dollar.

SelectUSA will expand from its traditional role in FDI (foreign direct investment) to work with U.S. companies looking to expand in or bring operations back to the United States. Commerce Under Secretary for International Trade Gil Kaplan made the announcement. Services will include:

  • Counseling, customized research, and data reports
  • Assistance to firms in understanding and navigating applicable regulatory frameworks
  • Connections between firms, local leaders and economic developers
  • High-level advocacy from the U.S. government

Are Reshoring Initiatives Working? An informal online poll by Trade & Industry Development magazine shows that only 16% of respondents believe that reshoring is not or will not happen.

Tariffs are working so far:

  • Economic Policy Institute reports that “aluminum tariffs have led to a strong recovery in employment, production, and investment in primary aluminum and downstream industries,” and have not impacted jobs in aluminum-using industries.
  • Coalition for a Prosperous America reports that primary steel and aluminum industries have added or announced at least 11,000 jobs.
  • The Reshoring Initiative does not recommend narrow tariffs for fixing the trade deficit but is pleased to see these preliminary results.

Win the National Metalworking Reshoring Award! Deadline to apply is Feb. 20, 2019.

 

Select Publications
 

Engineering.com: Video, “The State of Manufacturing in America Right Now, with Harry Moser of the Reshoring Initiative”: Harry Moser’s perspective about the progress of reshoring today, as well as the issues facing American manufacturers now and into the future.

Public Radio International: “Trump hypes jobs relocating back to the US. Are they?” Harry Moser provides data to clarify the issue.

The Washington Post: “Trump’s claim that job growth is due to companies ‘moving back’” Harry Moser confirms the strong reshoring numbers.

Upcoming Events
 

March 6-9, 2019 – MFG Meeting 2019 – Tucson, AZ

March 6, 2019 – IoT World USA – San Diego, CA

the state of manufacturing

March 26-27, 2019 – American Manufacturing Summit – Chicago, IL

The Reshoring Initiative is a proud partner of the upcoming American Manufacturing Summit (#MfgUS19) taking place this March in Chicago, IL. We are offering supporters special benefits and rates. Join us to discover the latest industry trends and network with manufacturing, supply chain, and operations executives: www.manusummit.com

May 8-9, 2019 – SEAMS Annual Networking Conference – Savannah, GA

Thanks to all our readers, sponsors and companies using the Total Cost of Ownership Estimator® – Your participation makes more reshoring possible. We welcome our newest sponsor, Machines4sale.com.
Reshoring Initiative

Sincerely,
Harry Moser, Founder & President, Reshoring Initiative, (847) 867-1144
Millar Kelley, Newsletter Editor & Research Analyst
 
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