Onshoring leads US manufacturing job surge: TD Economics

More than half a million jobs have come back to the US, but they're not the same as they were.

TORONTO—A slowdown in offshoring is boosting jobs in US manufacturing, which has accounted for about 25% of recent gains, but, the jobs coming back aren’t the same as those lost during the recession.according to TD Economics.

The report by TD economist Michael Dolga, Offshoring, Onshoring and the rebirth of American manufacturing, suggests US manufacturing has been a key driver in the country’s recovery, adding nearly 500,000 jobs since Jan. 2010. While onshoring is still in its infancy, Dolga says the scales are beginning to rebalance for some industries as conditions evolve, such as rising offshore labour costs and an appreciating rembini.

Rising capital-intensity across the manufacturing sector continues to gradually erode the benefit of offshore production, the report says.

The jobs coming back, however, are from relatively capital intensive and recently off-shored manufacturing industries, such as computers and electronics, fabricated metals, electrical equipment, and plastics and rubbers. These industries are expected to lead the reshoring trend, while more labour-intensive industries, such as apparel and textiles, will likely remain offshore.

Canada, which continues to struggle with productivity issues, could feel the heat from these enhanced reshoring efforts.

“It definitely makes us realize that the US is aggresive,” says Martin Lavoie, director of manufacturing policy at Canadian Manufacturers & Exporters (CME). “Governments, both federal and at the state level, are creating aggressive tax reforms as well to attract manufacturers back to the US, which will put a bit of heat on Canada.”

He says Canada’s answer to US manufacturing’s resurgence will come down to boosted productivity and government incentives for R&D and advanced manufacturing.

Click here for TD’s full report.