DENNIS SEID
“Reshoring” has been a buzzword in manufacturing of late, perhaps gaining more momentum with the election of Donald Trump as president.
Trump, as we’ve heard, has threatened to punish companies that send jobs overseas.
Last week,Carrier announced – with Trump in attendance – that it would keep about 800 union and supervisor jobs from being outsourced to Mexico.
This is a victory of sorts for reshoring, which is defined as “the practice of bringing manufacturing and services back to the U.S. from overseas.”
Mexico isn’t exactly overseas, but we get the idea – American jobs were “saved.”
In Northeast Mississippi, some companies have done what they can to keep jobs here, with a little help from the state.
Furniture manufacturing has benefited from a tax credit given to them for retaining cut-and-sew jobs since 2010. Companies get a $2,000 tax credit for each cut-and-sew job – which requires cutting and sewing fabric and leather upholstery – created.
In the most recent legislative session, the credit was renewed through Jan. 1, 2019. It’s not clear, however, how many of those jobs have been created due to the credit.
The furniture industry employs more than 20,000 people directly, and it has added some 1,500 jobs since July 2014. Most are production jobs.
Still, the average annual pay in furniture is $31,000. The median household income in Mississippi is $40,593, which is more than $15,000 lower than the national median income.
So, how do we get furniture workers’ pay to at least the state median? It’s quite simple – companies must pay them more. In order to do that, however, they have a few choices: They can eat the increased expense, they can pass along the added cost to consumers, or they can do a combination of the two.
On average, a furniture employee makes just under $15 an hour.To get to the median income level in Mississippi, they’d have to get about $19.50 an hour.
Let’s say you have a 200-worker factory. If your raise their pay by $4.50 each a week, that’s another $36,000 a week, or $1.87 million a year the company has to come up with.
So, it’s understandable that a company might have to raise prices. But are Americans willing to pay more?
According to the Reshoring Institute, 97 percent of 14,000 consumers interviewed between 2010-2013 have “a positive view of goods manufactured in the U.S.” Ninety-one percent of also have a positive opinion of companies that manufacture in the U.S., believe it is important to manufacture in the U.S., and think the government should take steps to support American manufacturing.
However, it’s not clear if Americans are actually buying American goods. But 80 percent of American consumers said they’re willing to pay more for American-made goods. Nearly a quarter of them are willing to pay a price premium of at least 10 percent across all categories of goods surveyed.
Will they do the same for clothing, cars and other items? Something to think about.
Contact Dennis Seid at (662) 678-1578 or dennis.seid@journalinc.com
