Top U.S. manufacturers returning jobs back to states from China
American corporations that off-shored manufacturing to China for two decades are bringing jobs home.
A decade ago, jobs were on a nearly one-way street to the People's Republic. In 2003, when 150,000 manufacturing jobs went to China, 2,000 came this way, says Harry Moser, head of the Reshoring Initiative, a nonprofit group that tracks U.S.-China job flows.
Today “it's a wash,” Moser told the Tribune-Review. Last year, 30,000 to 50,000 jobs left the United States for China, but 30,000 to 40,000 left China for the United States, according to an analysis of hiring by Apple, Motorola, General Electric, Ford and more than 140 other American-based companies.
A survey by Boston Consulting Group showed this trend is poised to accelerate. More than 50 percent of $1 billion-plus U.S. companies with operations in China are considering bringing all or part of their production to American shores, the consulting group reports.
Twenty-one percent told surveyors that they are doing so or plan to do so within two years. The 2013 figure is double that of 2012, the group noted.
Jerry Jasinowski, former president of the National Association of Manufacturers, cites as reasons: high Chinese energy prices, escalating wages, land prices, lack of protection for intellectual property, and air pollution.
It's difficult to recruit managers willing to relocate families to Shanghai or another city where pollution levels are considered a serious health threat, he said.
Greg Hall, a senior vice president of Wal-Mart, told Site Selection magazine that the economics of manufacturing are changing rapidly: “In previous decades, investment mainly went to Asia where wages were low. The price of oil was low. ... (Today) labor costs in Asia are rising. Oil and transportation costs are high and increasingly uncertain.”
Wal-Mart plans to shift at least $50 billion in manufacturing to the United States.
At the same time, a movement in China is impacting reshoring to America, Jasinowski said. Educated and wealthy Chinese increasingly want to move their families and money elsewhere.
About 30 percent of wealthy Chinese have moved some assets offshore, according to a 2013 survey by Boston-based Bain & Co. Among the high-net-worth Chinese without overseas investment, Bain found that more than half plan such investment. Only one in 10 said they did not plan to migrate assets out of China.
The Huron Report, which has tracked ultra-wealthy Chinese for more than a decade, reports that 16 percent of Chinese millionaires have moved or applied for visas to move out of the country. Forty-four percent are considering doing so.
Moser said he reviewed the Bain report and has told others: “The Chinese are taking their money out. Why should you (American companies) be putting money in?”
The change in job direction is not simple, however. Over the years, China acquired manufacturing from so many firms — and its domestic partners acquired so much foreign technology — that it developed essential supply lines. Just as American auto manufacturers remained competitive in part because domestic supply partners are strong, industries that relocated to China have long Chinese supply chains.
During the past three years, the Trib has chronicled how China leveraged its control over the mining and processing of rare-earth elements to lure manufacturing.
Paul Gillis, a professor at Peking University's Guanghua School of Management in Beijing, said, “Parts and supplies can be hard to find in the U.S. While China has lost its labor cost advantage, it is a lot harder than some think to just pull up stakes and move the factory to Pittsburgh.”
Don't expect a publicity campaign by any company planning to pull up Chinese stakes and move to the United States, experts warn.
“Manufacturers don't like to call it ‘reshoring' or ‘onshoring,' ” said Paul Cicio, president of Industrial Energy Consumers of America, a Washington manufacturing lobby. “They're sensitive. They don't want to tick the Chinese off” because China represents the largest market in the world.
If Wall Street banks are a barometer for the change in economic outlook, they appear to have made their bets. This year Goldman Sachs finished selling its stock in the Industrial and Commercial Bank of China, the world's largest bank, ending a relationship begun in 2006.
In September, Bank of America cut ties with China Construction Bank Corp. with a sale of $1.5 billion in stock. It acquired 9.9 percent of the bank in 2005. In December, HSBC dumped its final shares in the Bank of Shanghai.
Although the reasons for the breakups are varied, banking experts say the underlying reason is uncertainty about bad debts owed to banks in China.
Lou Kilzer is a staff writerfor Trib Total Media.
Show commenting policy
TribLive commenting policy
You are solely responsible for your comments and by using TribLive.com you agree to our Terms of Service.
We moderate comments. Our goal is to provide substantive commentary for a general readership. By screening submissions, we provide a space where readers can share intelligent and informed commentary that enhances the quality of our news and information.
While most comments will be posted if they are on-topic and not abusive, moderating decisions are subjective. We will make them as carefully and consistently as we can. Because of the volume of reader comments, we cannot review individual moderation decisions with readers.
We value thoughtful comments representing a range of views that make their point quickly and politely. We make an effort to protect discussions from repeated comments either by the same reader or different readers.
We follow the same standards for taste as the daily newspaper. A few things we won't tolerate: personal attacks, obscenity, vulgarity, profanity (including expletives and letters followed by dashes), commercial promotion, impersonations, incoherence, proselytizing and SHOUTING. Don't include URLs to Web sites.
We do not edit comments. They are either approved or deleted. We reserve the right to edit a comment that is quoted or excerpted in an article. In this case, we may fix spelling and punctuation.
We welcome strong opinions and criticism of our work, but we don't want comments to become bogged down with discussions of our policies and we will moderate accordingly.
We appreciate it when readers and people quoted in articles or blog posts point out errors of fact or emphasis and will investigate all assertions. But these suggestions should be sent via e-mail. To avoid distracting other readers, we won't publish comments that suggest a correction. Instead, corrections will be made in a blog post or in an article.
- Conviction overturned in Italy murder case for Seattle woman
- Eagle egg breaks, parents abandon nest
- MLB notebook: Red Sox slugger Ortiz defends his reputation, touts drug test record
- Norwin High School health teacher charged with selling heroin
- Pedestrian struck in Hazelwood Monday dies
- Penguins coach Johnston’s mother dies
- Designer mannequins fill NYC exhibition
- Cat or dog not great fit for pet? A bunny might be your buddy
- Reliable family car feels upscale
- Pirates notebook: Locke makes bid for final rotation spot, Tabata cut
- Stocks snap 4-day losing streak; corporate earnings concerns linger