Reshoring and leveling the manufacturing playing field

January 25, 2017

Reshoring and leveling the manufacturing playing field

Outsourcing of manufacturing jobs has been the norm for many countries over the past 20 years because it has simply been too expensive to compete loca...

Outsourcing of manufacturing jobs has been the norm for many countries over the past 20 years because it has simply been too expensive to compete locally with low-cost labor forces elsewhere. However, Industry 4.0 appears to be gaining momentum and it is already proving to be the great equalizer as it applies to realizing cost-effective ways to manufacture goods and services.

Growing up in a blue-collar town where people took tremendous pride in the work they performed and the products they helped build provided everyone with a sense of well being. Whether it was building an entire airplane engine for the next space shuttle, a high-performance fighter jet, or making loaves of Wonder Bread, there was an ecosystem of smaller local manufacturing companies that supplied the various parts or ingredients to manufacture these products. This basic building block of our economy has been lost for too many years.

To restore this local manufacturing pride, create new jobs, and re-build this highly valued ecosystem, the concept of reshoring and foreign direct investment (FDI) has been gaining momentum since 2010. Data from the Reshoring Initiative suggests that in the U.S. alone there has been an average loss of 220,000 manufacturing jobs per year, totaling 3 to 4 million manufacturing jobs lost to offshoring initiatives since 2000. This directly contributes $500 billion per year to our trade deficit. Fortunately, more companies are re-evaluating their manufacturing decisions based on supply chain stability, quality, proximity to customers, higher freight costs, increased skilled labor force, and government incentives. However, even with these efforts only 249,000 manufacturing jobs have been reshored since 2010. While this looks dismal for the U.S., this same scenario has played out across other countries and economies around the world.

Industrial automation technologies for smart factories

So is there hope on the horizon to help accelerate this reshoring effort?

The simple answer is yes. Fortunately companies are dedicated to delivering industrial automation solutions that enable the key technologies needed to create intelligent factories that provide countries a chance to “level the playing field.” These technologies can be used to build smart factories that help reduce lost productivity, increase throughput, improve the quality of products, and bring manufacturing jobs back into the country. These smart factories are no longer a mystical idea, but they are being built with amazing results, as seen in the September 2015 study “Future Proofing UK Manufacturing” by Mike Rigby, national head of manufacturing, transportation, and logistics at Barclays.

So how can these reshoring initiatives continue to gain momentum and be accelerated?

As in the Barclays study, the first step is to encourage governments to give incentives to companies so that they will invest in and build smart factories. The second step is to encourage our community colleges and universities to expand their curriculums to offer dedicated technical programs. This will provide much-needed training and encourage people to step back into manufacturing as a career. In the end, endorsing technologies that help to level the playing field will positively impact and accelerate this reshoring trend.

Jeff DeAngelis, Managing Director of the Industrial & Healthcare Business Unit at Maxim Integrated, is responsible for providing team leadership, strategic vision, and the creation of process-oriented solutions to mitigate day-to-day tactical and operational issues. He coordinates five core business lines that produce integrated circuits, which sell into the Industrial & Healthcare markets.

Jeff DeAngelis, Maxim Integrated