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US reshoring still to take off in a big way

Higher labor costs in China and political pressures were supposed to drive US manufacturers to bring production home. That is yet to happen. Reshoring trend has yet to materialize in any major way. US imports of manufactured goods from the 14 countries that would be typically associated with offshoring actually grew by eight per cent in 2017. By comparison, US domestic manufacturing output grew only 5.6 per cent.

The US is growing, manufacturing jobs are up, but imports are growing faster. The reshoring wave that was supposed to start back in 2011 really never took off. In fact more and more products are coming into the US from those offshoring countries. Some of these countries are China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lanka and Cambodia.

One reason is that US consumers are still looking for a bargain. That means they are buying products that are cheaper because they’ve been made offshore. Even US companies that have reshored over the past few years have been reluctant to invest too much. In fact some have actually scaled down their reshoring. They have discovered that any product with labor-intensive manufacturing processes is still more economical to produce in low-cost countries.