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Perhaps, however, the re-shoring is in fact happening. There has been a massive build out of new manufacturing facilities in the US over the last few years. Ne
by adventured 3y ago
Perhaps, however, the re-shoring is in fact happening. There has been a massive build out of new manufacturing facilities in the US over the last few years.
Near $120 billion spent on new manufacturing facilities in 2022 alone. The surge looks like this:
https://i.imgur.com/Bydq6Hb.png https://i.imgur.com/Bydq6Hb.png
The US manufacturing sector has added 900,000 jobs since 2014 (according to the US Bureau of Labor Statistics). It was at 12,081,000 manufacturing jobs in January 2014, and January 2024 is at 12,979,000. For the US, which is supposed to be a wilting manufacturer, that's a huge gain over a decade (including the pandemic hit, which slashed 700,000 jobs out temporarily; one guesses the figure would just be even higher minus the pandemic).
Manufacturers don't add a million jobs if they're not expanding presence. Even if they were expanding very slowly, they would do everything possible to avoid adding jobs/labor (most US manufacturing expansion in decades past came from productivity gains).
The US has modest corporate taxes, a good business regulatory environment, amazing capital markets, enormous economic scale, a single giant market, ports that can easily get you to Asia/Europe/Latin America, consumers, and labor. It makes perfect sense that at a time of growing risk of conflict with China, that the US would be reshoring.
- ethbr1 3y agoAlso, wouldn't be surprised if the drive towards minimal-latency shipping is having some evening effect. Increased labor costs... versus rapid, $$ last-minute transport / port fees to hide latency across the Pacific. At some point, it's just cheaper to pay the manufacturer more, if they can more rapidly respond to demand.
- bobthepanda 3y agoPaying more just doesn’t work if a chokepoint is clogged up or closed. Chinese ports locking down, congestion at LA/Long Beach, Panama running dry, Suez being blocked, the Red Sea crisis, etc. It is making just-in-time inventory untenable. Canada and Mexico have multiple entry points without as severe risk.
- SCM-Enthusiast 3y ago> https://i.imgur.com/Bydq6Hb.png https://i.imgur.com/Bydq6Hb.png Looks like an inflation graph to me.
- 2devnull 3y agoWithout any source information it may as well be written in crayon. (No offense. At least op provided something to back their claim.)
- chaostheory 3y agoWhat people arguing against your points don’t understand is that globalism is coming to an end. It started when China initiated decoupling and started their ill advised wolf warrior diplomacy.
- whimsicalism 3y agoin favor of 'friend-shoring' not really 're-shoring'
- ponector 3y agoIs it? From what I see, global trade is free as never been in previous century or any time in history before.
- chaostheory 3y agoYes, but that’s not the trend. The US can no longer afford to be world police with its navy. Russia is now outside of the US economic system, while relations with China continue to deteriorate. It will deteriorate further once China attacks Taiwan.
- ponector 3y agoUS-China tensions are not that huge at the moment. Russia is not really cut off from the global trade. Africa becomes more united and collected. Globalization is still a trend.
- chaostheory 3y agoUS China relations continue to deteriorate because of China’s aggression in the South China Sea and continued decoupling aka de-risking. Russia is cut off from the developed Western economy. Some NATO commanders are also warning that Russia will not stop at Ukraine. Even if Russia and China weren’t on a war path, the US simply cannot continue to subsidize global defense of trade via our navy. Currently, only the UK and Japan have a sizable fleet of long range ships, but they still don’t compare to the US navy. Yes, globalism is still here, but the trend is that it will be on a major decline in the coming years. Destabilizing geopolitics will only hasten it.
- whimsicalism 3y ago> The US has modest corporate taxes, a good business regulatory environment, amazing capital markets, Yep! > ports that can easily get you to Asia/Europe/Latin America, consumers, Yep! > and labor Nope. Labor costs in the US are ridiculous and make it non-economical for most consumer manufacturing. This is why real output remains low and we are exploring 'friend-shoring.'
- andyferris 3y agoWell… I believe labor in the US is cheaper than Australia, NZ, UK, and most of the EU. (I’m not sure about Japan). Basically all comparable countries in terms of wealth. So that’s something?
- xxpor 3y agoThere's 0 chance US labor is cheaper than the UK at this point. US: >Real median household income was $74,580 in 2022 UK: >In the financial year ending (FYE) 2022, median household income in the UK before taxes and benefits was £35,000, increasing to £38,100 after taxes and benefits.
- rendang 3y agoNZ is even lower per https://en.wikipedia.org/wiki/List_of_countries_by_average_wage https://en.wikipedia.org/wiki/List_of_countries_by_average_w... so unless there is a big difference in the manufacturing sector specifically, it's probably also cheaper there
- HPsquared 3y agoThat combined with the house prices... ouch.
- andyferris 3y agoWait - the median income in the UK is higher AFTER tax is removed? The median person receives more benefits than pay tax?
- acchow 3y ago> It was at 12,081,000 manufacturing jobs in January 2014, and January 2024 is at 12,979,000. That is 7.4% growth since 2014. US population grew by 6.4% during that same period. Hard to see the "huge gain" here.