Big name US firms "reshoring" from China – Channel News Asia

SINGAPORE: For years, US companies have saved money by shipping jobs overseas where products could be made at a fraction of the cost.

But now, some big name companies are starting to do what’s known as “reshoring” – bringing jobs back from China to the US.

It started off rather anecdotally, with small companies announcing plans to shift some manufacturing jobs from China back to the US.

Now, the big hitters are also getting into the act.

Retail giant Wal-Mart Stores has promised to buy an extra US$50b in US-made goods over the next decade.

And, Apple said the new MAC will be assembled in Texas.

Bank of Singapore’s chief economist, Richard Jerram, said: “Part of the reason for this (reshoring) is also intellectual property protection. Of course, China has a dreadful history on protecting intellectual property.

“So if you’re a high-tech company like GE or Apple, then you’re probably quite worried about your technology and your processes being stolen from you.”

Another crucial factor is wages. Pay in China is up 71% since 2008, according to the National Bureau of Statistics of China, while wages in the US have remained fairly stagnant.

The shale gas boom has also helped to lower production costs in the US.

There is no exact data on how many jobs have returned to the US.

The Reshoring Initiative puts it at 50,000 while others say it’s too early to tell.

Cliff Waldman, senior economist at Manufacturers Alliance for Productivity and Innovation, said: “Yes, yes, more companies are having the US play a little bit bigger role in their businesses but we don’t know at the same time if there are more companies leaving, and in a global economy you worry about net flows.”

But not all sectors are prime candidates for reshoring. While high-tech companies could see big benefits, don’t expect garment factories to start springing up.

The net result is that this may not erode business for Asia.

Cliff Waldman said: “If you have a large manufacturer or even a midsized manufacturer that has business in Fujian, China and business in Canton, Ohio, strength in one does not mean weakness in the other. In fact, quite the opposite. Parts of the chain reinforce each other.”

No doubt, the Made-in-America slogan is staging a comeback but there is still plenty of work to go around.