Manufacturing in the United States is on a roll, thanks in no small part to the growing “reshoring” trend of domestic companies moving operations—and jobs—back home. At the same time, international firms are increasingly setting up shop and opening businesses across the country.
A record 364,904 manufacturing jobs were announced in the U.S. in 2022 through reshoring and foreign direct investment (FDI), according to the Reshoring Initiative’s 2022 Data Report released in late March. That’s a 53% jump over 2021, which set the previous all-time mark of 238,739.
The growth is widespread, led by a “huge surge” in battery production for electric vehicles, according to the report. Last year’s spike is credited to the passage of two key legislations: the Inflation Reduction Act and the CHIPS and Science Act. In fact, more than half of the jobs cited were attributed to investments in chips and EV batteries. Electrical Equipment remained the top job creator by industry in 2022, followed by Computers/Electronics and Chemicals. Transportation fell two spots to fourth place.
The U.S. has been gaining ground over the last 13 years—albeit with a few peaks and valleys—since the economy came out of the last recession. After dipping in 2015, job creation climbed more than 50% in each of the next two years (to 174,278) on the backs of tax and regulatory cuts. But increasing tension and trade wars with China slumped reshoring/FDI-related jobs to about 100,500 in 2019.
It’s been a meteoric rise ever since, culminating in last year’s 364,904 tally. If you do the math, that’s nearly 1,000 new jobs added every day! And the cumulative total is even more impressive: Nearly 1.6 million jobs have been announced, with an estimated 1 million added (allowing for a conservative two-year lag from announcement to hiring) through reshoring and FDI since 2010, which coincides with the Reshoring Initiative’s formation. Of last year’s total, reshoring accounted for 58% of the growth versus 42% for FDI.
The underlying trend is driven by the recognition that the total cost of offshoring exceeds that of sourcing domestically, according to the Sarasota, Fla.-based group. In recent years, companies also have taken action to lessen their potential vulnerability to supply chain disruptions and geopolitical events.
But a much broader industrial policy, including more aggressive recruitment and training, will be needed to sustain such a high level, the group said. The current trajectory will also require a lower U.S. dollar to replace momentum from what the group calls “unsustainable government subsidies.”
The U.S. also is expected to benefit from increased “nearshoring” of work from Asia to Mexico. As a result, the Reshoring Initiative anticipates annual job announcements in the U.S. to stabilize at about 350,000 per year for 2023 and 2024.
That’s good news for a year that has otherwise started with some speed bumps and uncertainty.
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