What Effects Will Reshoring Have?

October 28, 2013

Offshoring caused a lot of problems within the middle-class people of America. Many manufacturing jobs were lost to workers overseas that could be paid a much lower wage and with little to no benefits. This shift has caused many Americans to seek work in other industries, namely the service industry. Unfortunately, the pay is less in many other industries, thus leading to a decrease in economic activity for the United States. However, manufacturing jobs are trickling back in to the United States by way of ‘reshoring.’

Reshoring is offshoring in reverse. Many companies have discovered the cost of doing business in other countries is much more than initial estimates. They have also learned that the quality of their products has greatly diminished, thus tarnishing the name of previously well-respected companies.

Reshoring will have a positive impact on the United States. First, it will bring good-paying, lower skilled jobs back to the country which will put many Americans back to work. Second, the products offered in stores will be of a higher-quality and the words “made in China” will start being the exception rather than the rule.

Reshoring was bound to happen. When middle-class jobs get sent to another country, it has a stimulus effect on that country’s economy. Due to the increased labor, there is an increase in demand. That increase in demand then increases the need for supply and thus more jobs. After some time, the people of the country in question will demand higher wages as they acclimate to a higher standard of living. When that happens, businesses find that it’s no longer cost-effective to do business in that country.

Bringing jobs back to America will be one of the best things that can happen – especially manufacturing jobs. The United States used to be the largest importer of raw materials and the largest exporter of finished products, but after the offshoring craze, that role has nearly reversed. With manufacturing jobs returning to the United States, there will be an increase in economic activity which may just pull us out of the recession we find ourselves in today.

MBR Consulting


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