After Decades of Outsourcing, Manufacturing Jobs Coming Home

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After Decades of Outsourcing, Manufacturing Jobs Coming Home to US

Published: Monday, 7 May 2012 | 12:27 PM ET Text Size
By: Michael Moran, GlobalPost


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Beginning in the 1970s America’s high-paying manufacturing jobs in the steel, textile, electronics and automotive industries relocated first south to Latin America and then east to Asia.


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In what some dubbed “a global race to the bottom,” labor rights have dwindled all along the way and the American middle class, long sustained by those manufacturing jobs, finds itself gutted. Now the fate of what is left of the American middle class is at the center of a presidential election and forcing a reexamination of the impact of the global decline of labor rights.

But after years of pain for America’s manufacturing sector and its workers, some economists and analysts are wondering if the tide may be turning.

Call it “re-shoring” or “rebalancing” or just “revenge,” but the dynamics of global labor, transportation and productivity costs that eviscerated American manufacturing over the past decade have begun to shift again.

Over the past few years, some key American manufacturers have either brought jobs back to the US from Asia and Latin America, or have made important decisions not to relocate them in the first place.

For several years now, the anecdotal data has been tantalizing:

Caterpillar [CAT  95.17    -2.02  (-2.08%)   ] is building a $120 million plant to make giant earthmovers in Victoria, Texas, including some models that were previously built in Japan and shipped back to North American customers. The Japan plant is now free to devote more capacity to the booming Asian market.

Master Lock, in Milwaukee, landed a visit from President Barack Obama in February after its decision to bring 300 jobs back from China.

General Electric [GE  19.125    -0.195  (-1.01%)   ] reversed a decision to build a new “green” refrigerator plant in Asia and decided instead to invest $93 million in refurbishing a plant in Bloomington, Indiana, saving 700 jobs. The company followed up in 2010 by investing $80 million in a water heater plant in Louisville, Kentucky, preventing another 400 jobs from heading east.

Not to be outdone, GE competitor Whirlpool [WHR  61.17    -0.81  (-1.31%)   ] decided to break ground on a new $200 million plant in Cleveland, Tennessee rather than send the 1,500 jobs overseas. The facility is part of a four-year, $1 billion American investment campaign.

Dow Chemical, the cash register company NCR, Sauder Woodworking and the machine tool firm GF AgieCharmilles have all brought overseas production back to the US market in the past three years.


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Most economists — even those inclined to sympathize with the Obama administration’s economic policies — scoffed in 2010 when, in his State of the Union address, the president vowed to double US exports in five years — creating 2 million jobs in the process.

It’s not that this wasn’t possible in the eyes of economists. It just wasn’t likely, they thought, that the global conditions and political climate in the United States would allow it.

The “zero effect” — the distorting phenomenon of measuring growth starting at an unnaturally low point — kept a damper on enthusiasm even as export figures soared in 2010-2011.

Many experts assumed that the favorable trends supporting that growth had little to do with long-term shifts. Instead, most felt the numbers reflected a coincidental confluence of events: sky-high oil prices that drove the costs of shipping upwards, a mega-recession that undermined American labor’s negotiating leverage, Federal Reserve “quantitative easing” that kept the dollar cheap and pumped up US exports, and freak events like the euro zone meltdown and the Japanese earthquake/tsunami that took major players off the economic chessboard.

But the data has started to cause reassessments. Monthly net exports have grown from $140 billion to $180 billion since the start of 2010.

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