Harry Moser had already anticipated a U.S. manufacturing comeback in 2013 when I started telling stories of American manufacturers. He was tracking how many jobs companies planned to reshore in support of U.S. production, and today is among the nation's top experts on reshoring because the trickle he reported early on became a tsunami.
It's good to be right.
His new report measures more of the same: Moser's Reshoring Initiative (RI) tracks the number of manufacturing jobs U.S. companies plan to reshore, as well as foreign direct investment (FDI) in domestic manufacturing, and RI's "current 2022 projection of jobs announced is around 350,000 -- another record, up from 260,000 in 2021. If the projection is achieved, 2022 will bring the total jobs announced since 2010 to over 1.6 million." (Kentucky, North Carolina and Georgia are the top three destinations for jobs, all with large EV battery investments. Texas has dropped from #1 in 2021 to #13. Arizona ranks #16.)
It's no mystery why companies want more U.S. manufacturing: Doing business in China (the source of 44 percent of reshoring announcements) is risky, offshore supply-chain bottlenecks are wreaking havoc, and consumers want stuff made in the U.S. Brand promises matter.
Companies are also just doing the math -- with Moser's help. RI's Total Cost of Ownership (TCO) tools are helping many companies factor in all the expenses involved in offshore manufacturing operations, not just price (cost of production.) As the report notes, "The Chinese factory price is, on average, 30 percent lower than the U.S. price," but "by switching to TCO, companies will see that about 20 percent of what they now import from China can be sourced domestically without raising prices or cutting profits."
How important is TCO? Moser notes that historically, most companies that left to find cheaper factories offshore just didn't do the math -- in industries like machinery, transportation equipment, and appliances. "More recently, activity has shifted to include more essential products which the U.S. government should have recognized as too essential to rely so heavily on imports, including electric batteries, semiconductors, PPE, pharmaceuticals, and rare earths," the report concludes.
But demand for more U.S. manufacturing runs headlong into what Moser describes as America's "deindustrialization" policy -- a mix of anti-manufacturing policy outcomes that stand in the way of more domestic production. He's leading the charge for a "permanent industrial policy" that would "level the playing field enough that the companies would decide to reshore in their own self-interest." Here's Moser's Congressional testimony to that effect.
His roadmap is part of a new national narrative that's identifying ways to lower barriers to growing U.S. manufacturing. His prescriptions would:
Train a new -- and much larger -- skilled workforce
Reduce the value of the U.S. dollar
Maintain low corporate income taxes and capital investment breaks
Lower healthcare costs to reduce burden
Make the Section 301 tariffs permanent, or, better, replace it with a border adjustment tax (BAT) on all imports from all countries
Eliminate other sales taxes and use the extra revenue to fund Social Security and Medicare
Cooperate with Mexico and Canada to attract work from Asia to North America
Fill supply-chain gaps in the U.S. -- and aggregate demand to drive the domestic supply chain
While Moser's roadmap may end up being his true legacy, it's also worth asking how realistic it is to assume that key pieces of the plan are likely to cross a finish line. For example, how likely is it that Congress would agree on a strategy to lower the value of the U.S. dollar and implement tariffs to specifically benefit manufacturing?
It's fair to say that U.S. policymakers -- and most U.S. multinational corporations -- oppose tariffs, border taxes, and industry-targeted VATs of any kind. You're normal if you support "free trade" and seen as a bit unconventional if you don't. It's deeply ingrained: Most business leaders, politicians, and chambers of commerce and trade associations oppose tariffs. Because most U.S. corporations do.
Instead, America's new industrial reality will likely be shaped by us, by families and young people and employers who decide manufacturing is an occupation worth pursuing. The U.S. will need more than 3 million new, highly skilled manufacturing employees in the next decade, to meet the demand Moser anticipates and sustain a post-global industrial economy.
RI's report touches on a promising trend: "Currently, reshoring and FDI are continuing to add more high-tech jobs than low-tech ones, again driven by the essential products push. . . . . The challenge is to upskill our workforce so that more of them can work competitively on more highly automated production of lower-tech products."
I anticipate a pivot to this seminal point in future RI reports -- that automation and technology transforming U.S. manufacturing will catalyze employment growth in the sector, not diminish it, which is today conventional wisdom. When U.S. manufacturing companies can compete with their technology counterparts for STEM students, we will have won.
We might look back on one small nugget in Moser's 2022 Congressional notes as a clue to what might transpire in the years ahead -- Utah's new Manufacturing Modernization Grant, a modest $10 million fund designed to help "establish, relocate, retain, or develop the manufacturing industry in Utah." If companies use the money to invest in new equipment, assets that act as a magnet for new talent, others will follow.
More on the challenge and promise of transparent supply chains, and their potential to fuel more reshoring, in future editions.
Bart Taylor is publisher of CompanyWeek. Reach him at firstname.lastname@example.org.