Why Do Companies Offshore Jobs — and What Can Be Done to Convince Them to Reshore?

The Reshoring Initiative and Plante Moran recently launched a new survey to examine how best to motivate manufacturers to bring jobs and operations back to the United States.

The U.S. Manufacturing Reshoring Study aims to determine why many companies decide to offshore manufacturing jobs and look at ways the government can encourage companies to bring jobs home, or reshore. It’s critical information, considering offshoring has robbed American workers of at least 4 million jobs since 2000.

“We’re looking for actionable data,” said Harry Moser, president of the Reshoring Initiative. “This survey is intended to take a step in answering that question — what will it take to get these jobs back?”

Manufacturers and distributors can complete the survey online, which takes about 15 minutes to complete. The survey will close on at 8 p.m. EDT on Friday, Oct. 20.

More companies chose to return manufacturing to the United States than others chose to go offshore in 2016, according to the Reshoring Initiative’s research. But offshoring still threatens American jobs, and it is clear action from Washington is needed to strengthen American manufacturing and encourage further U.S. job growth.

The survey may offer some answers on how best to do that.

Survey results should provide quantifiable information identifying the respondents’ percentage of offshored materials, the reasons behind offshoring, and what policy changes would incentivize their companies to reshore. 

The Trump administration is expected to be particularly receptive to the results of the survey, said Tim Erdmann, a principal of Plante Moran, a public accounting and business advisory firm that has conducted similar surveys for specific industries in the past.

“I really see with the Trump administration a pretty significant opening to advance domestic American manufacturing abilities … I think there is at least a desire on the current administration’s part to see how rapidly and quickly we can grow American manufacturers, and we would be happy to support that,” Erdmann said.

Moser, formerly the executive of a machine tool manufacturer, personally saw the market for his company’s products evaporate as more companies offshored. In 2010, Moser founded the Reshoring Initiative to support manufacturers as they consider the potential costs of offshoring or reshoring.

The Reshoring Initiative’s Total Cost of Ownership (TCO) Estimator, a free online tool, enables companies to accurately forecast the cost of production in America and offshore — information that the Reshoring Survey also seeks.

In analyzing the survey results, the Reshoring Initiative and Plante Moran aim to evaluate whether the companies that appear most likely to reshore actually will, and how proposed public policy will impact these companies’ decision-making.  

“Clearly companies are motivated to improve both the top and bottom lines of their business, and there are strategic reasons they may be offshore, but, in many cases, they’re offshore only because there were cost advantages to being in some of these markets,” Erdmann said. “What percentage of production is offshore can come back—that’s another element that we would hope to understand from this survey. That even under the best of circumstances, what could we be shooting for—could we hope for a doubling of manufacturing output in the U.S. or some percentage improvement. We’ll see.”  

Survey results will be published before the end of the year, and may offer yet more impetus for Trump to support American manufacturing, including as the administration prepares to unveil the results of its national security investigations into steel and aluminum imports.

Click here to view and take part in the survey.

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Reposted from AAM

Posted In: Allied Approaches, From Alliance for American Manufacturing

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