Reshoring: Let's stick to the facts please

J.M.Barrie, the Scottish writer who created Peter Pan, once said: "Dreams do come true, if we only wish hard enough."

This comes to mind because of the recurring media stories trumpeting a reshoring of manufacturing jobs in the United States.

Well, in yesterday's New York Times, Steven Rattner rained on that parade with a strongly argued opinion piece headlined: "The Myth of Industrial Rebound".  Rattner is a consultant, former investment banker, and lead adviser to the Presidential Task Force on the Auto Industry in 2009. Rattner's work on General Motors and Chrysler turned out pretty well, even though I was among those strongly opposed to government support of the auto industry.

Rattner starts his column with this statement: "With metronomic regularity, gauzy accounts extol the return of manufacturing jobs to the United States." He cites the anecdotal articles of company X landing a job formerly in China, and then goes on: "But we need to get real about the so-called renaissance, which has in reality been a trickle of jobs, often dependent on huge public subsidies."

He also points out that big wins, such as GE's opening a new assembly line in Kentucky, created very low-paying jobs. Rattner cites a significant amount of data and examples to back up his point.

The issue is particularly topical because President Obama will deliver his 2014 State of the Union Address tomorrow night. Rattner says that the President's plans to establish "manufacturing innovation institutes" might "help at the margin", but will not improve the situation significantly.

I have written here previously that the while I would love the reshoring hoopla to be true, it is mostly wishful thinking by cheerleading reporters. The offshoring trend is, in fact, even picking up in medical manufacturing where medical device manufacturers are moving extrusion and molding jobs offshore to cut costs as part of restructuring efforts.

It was interesting to read the Twittersphere last night as "experts" reacted to Rattner's column. One Tweeter said he thought Rattner's points were interesting, but he left out the impact of the "3D printing revolution".  Don't get me started again. The so-called 3D printing revolution as it affects series manufacturing is a rant for another day.

Rattner did leave out or underestimate a few trends. One is the impact of the shale gas boom on basic manufacturing, particularly plastics. But that's at least two years off. It's also important to note that much basic manufacturing, including autos and plastics molding, is much healthier than it was pre-recession.

But a massive wave of reshoring? Please. The real story is great news. Let's leave it at that.

 

 

 

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