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Business and Labor

“Onshoring” of Manufacturing Appears now to be mere Hype

ManuEmp (BLS)

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(Analysis) Over the past couple of years, those supposedly in the “know” have spoken about a new phenomenon called “onshoring” – where production is brought back to the US – based on growing American competitiveness in high-skilled manufacturing, allegedly previously undetected inefficiencies from “offshoring”, and new sources of low-cost energy due to “fracking”.

A quick glance at the chart really makes such a claim increasingly hard to believe, though. After bottoming out in the depths of the past recession, manufacturing employment arguably merely grew back to its current long-term trend: decline. While many might have hoped that initial increases to the level of manufacturing employment from the recessionary trough portended a new positive trend, recent reported monthly levels speak much more in favor of declaring that there has only been a cyclical correction. In other words, it appears that the downward trend in manufacturing employment continues unabated.

This continued trend is worrisome to labor and any American citizen who is concerned about long-term competitiveness of the US economy. We appear to be on a path where future job growth occurs only in low-skilled and low-paying service industries. It is hard to reconcile a dynamic, productive economy with one that grows (relatively) its retail and hospitality & leisure industries.

This hype surrounding “onshoring” illustrates something important about being informed in today’s world of spin-doctoring: one should always consider the source and any potential conflicting interest. Of course manufacturers, who gutted US industry and continue to invest profits overseas where labor costs are very low, want to deflect attention from what could be easily construed as very unpatriotic behavior. Another potential example of recent hype concerns inflation. Both the “rentier” class and financial institutions have a large incentive to use scare tactics about the potential effects from inflation, as they are definite (short-term) losers in redistribution caused by inflation.

Both hypes of “onshoring” and inflation arguably serve as support to special interests, but only in a very myopic sense, as inflation would help the overall economy – and hence return on investment in the aggregate – and trying to pull the wool over labor’s eyes, by claiming that more investment by MNCs is leading to a new trend of rising manufacturing employment in the US, can only be successful for so long in the face of contrary evidence… then what? Most likely more disillusionment in our so-called leaders, at a time when confidence in many of our institutions is already weak historically. Very short sighted, indeed.

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