‘Reshoring’ is returning factory jobs to region
DAYTON — A growing number of American companies are starting to shift some production back to the U.S. from China and other low-wage countries, reversing the manufacturing industry’s offshoring trend of the past three decades.
This “reshoring” initiative is benefiting some Dayton-area firms, including parts suppliers and tool-and-die makers, a local manufacturing expert said.
“Companies in the Dayton area are starting to see an uptick in business coming from reshoring,” said Tim O’Meara, board chairman of the Dayton Region Manufacturers Association and vice president of sales and marketing for Gem City Engineering and Manufacturing in Dayton.
Caterpillar, General Electric and Whirlpool are among the corporations that are returning some production to the U.S., although the overall pace remains slow. Experts attribute the trend to rising transportation and overseas labor costs, among other factors.
According to the U.S. Department of Commerce, U.S. unit labor costs dropped nearly 17 percent between 2000 and 2011, meaning that productivity rose faster than labor costs. In contrast, economywide unit labor costs in China have spiked by more than 85 percent since 2002.
“We are starting to see a number of companies thinking about reshoring in ways that will be good for our economy,” said Jeff Finkle, president and chief executive of the International Economic Development Council.
Manufacturing supports an estimated 17.4 million jobs in the U.S., or about 1 in 6 private-sector jobs, according to the National Association of Manufacturers. More than 12 million Americans, or 9 percent of the nation’s workforce, are employed directly in manufacturing.
In 2013, manufacturers contributed $2.08 trillion to the U.S. economy, up from $2.03 trillion in 2012, according to association data. This accounted for 12.5 percent of the nation’s gross domestic product.
Finkle said manufacturing “can grow” here at home.
In March, Whirlpool Corp. announced a $40 million investment in its Greenville production facility that will nearly double its size and create about 400 jobs by 2018. The facility, which employs about 1,000 workers and produces KitchenAid small appliances, won those jobs over China, company officials said.
In 2012, GE Appliances opened a $38 million hybrid water-heater manufacturing plant in Louisville, Ky., as part of a commitment to invest $1 billion and create more than 1,300 jobs in the U.S. by 2014.
“As a direct reflection, there are companies in the Dayton area that are doing work with GE that are going to be beneficiaries of some new manufacturing lines,” O’Meara said. “So you are seeing a capital uptick as well as a reshoring of automation lines into the area.”
Gem City Engineering and Manufacturing’s own business is picking up because of reshoring from both China and Europe, O’Meara said. He attributed the latter boost to the dollar’s favorable exchange rate to the euro. The Dayton company is a specialized equipment provider and product manufacturer.
O’Meara said the region’s machine-tool industry should see an increase in business as U.S. factories start to upgrade their equipment to meet production requirements. Capital spending is expected to increase 9 percent this year and an additional 7 percent in 2015, he said.
“That’s some very encouraging news for manufacturers in the Dayton area, because there are a lot of companies in the Dayton area that design and build special equipment,” O’Meara said.