A huge surge in electric vehicle (EV) batteries and semiconductor chips, combined with a continued trend in a broad range of industries, set off seismic waves of reshoring and foreign direct investment (FDI), resulting in the highest rate ever recorded. Jobs announced in 2022 were a record-breaking 364,000 jobs, a 53% increase from the 2021 record high. See Figure 1. Figure 1 The total number of jobs announced since 2010 is now nearly 1.6 million. New investments in U.S. manufacturing by domestic and foreign companies accelerated even more than anticipated due to the Inflation Reduction Act (IRA), the Chips and Science Act (CHIPS) and de-globalization trends. EV battery and semiconductor investments account for the largest increases in job announcements (53%). Top states —catching large “elephants” In 2022 New York had the highest job announcements. Every year top states are driven by catching large “elephants.” In this case, New York scored big projects by Micron’s $100,000 billion chip plant (9,000 jobs) and EV battery manufacturer Imperium3 (5,500 jobs). Ohio, Georgia, and Tennessee ranked second, third, and fourth for new jobs. California had the most individual company cases but was only thirteenth on jobs, not catching many “elephants.” See Figure 2. Figure 2: Source: Reshoring Initiative Library data Mitigating supply chain risk and uncertainty Supply chain gaps and the need for greater self-sufficiency set the stage for the current upward trend in reshoring. The risks of a Taiwan-China conflict or China voluntarily decoupling are focusing those concerns. Destabilizing geo-political and climate forces have brought to light our vulnerabilities and the need to address them. The White House responded with the IRA, CHIPS, and the Bipartisan Infrastructure Bill, offering some direction and financial security to the companies and industries intent on filling the gaps. Top industries that reshored and FDI’d Green energy investment from domestic and foreign companies has been surging in the U.S. EV batteries were the most active product reshored/FDI’d in 2022. The share of jobs announced by electrical equipment, including EV batteries, went from 3% in 2019 to 44% in 2022. In 2022 there were 146 battery-related cases that account for 105,000 jobs announced, including the supply chain. The second largest industry was computer and electronic products. It continues to grow, pushed in recent years by solar panels, robotics, drones, and most recently, semiconductors. In 2022 there were 61 cases of semiconductor/chips, with 28,800 jobs announced. To date, over fifty new semiconductor ecosystem projects and $210 billion in private investment have been spurred on by the CHIPS and Science Act of 2022, which will reduce dependence on critical technologies from China and Taiwan. In third place is chemicals, driven by pharmaceuticals (specifically, vaccines and COVID- 19 treatments) renewable fuels like hydrogen, and rare, earth-based chemicals required for batteries. See Figure 3. Reshoring + FDI by Industry, 2022 vs. 2019 2022 2019 Rank Industry Jobs Companies % of jobs % of jobs 1 Electrical Equipment, Appliances & Components 151,905 381 42% 4% 2 Computer & Electronic Products 93,445 375 26% 13% 3 Chemicals 28,350 303 8% 11% 4 Transportation Equipment 25,938 146 7% 34% 5 Medical Equipment & Supplies 14,468 105 4% 4% 6 Apparel & Textiles 10,674 138 3% 6% 7 Primary Metal Products 9,569 49 3% 3% 8 Machinery 5,971 88 2% 3% 9 Food & Beverage 4,408 44 1% 2% 10 Miscellaneous, Including Hobbies 3,863 25 1% 1% 11 Castings/Foundries - Subset of Primary Metal Products 3,450 20 1% 1% 12 Fabricated Metal Products 2,984 33 1% 5% 13 Plastic & Rubber Products 2,913 36 1% 3% 14 Wood & Paper Products 2,815 21 1% 4% 15 Nonmetallic Mineral Products 2,276 26 1% 1% 16 Furniture and Related Products 1,880 30 1% 3% Comprehensive actions for cost competitiveness CHIPS and the IRA are necessary in the short term but are not sufficient long term since they do not improve the U.S. anticompetitive cost structure. The current actions and momentum are a great start, but the U.S. cannot afford to offer hundreds of billions of dollars to new incentives every year. A true industrial policy would accelerate the trend and increase U.S. manufacturing by 40% or five million jobs. We suggest an industrial policy that would level the cost-playing field via comprehensive actions such as massive skilled workforce investments, a 25% lower USD and immediate expensing of capital investments. We encourage the U.S. to become competitive on all tech levels to balance the trade deficit and employ a broader range of workers. The Reshoring Initiative is available to help government policymakers establish a more effective, lower cost industrial policy to bring millions more jobs back. We also help companies make the right decision on whether to reshore their products. Priorities shift to resilience, but cost is still a priority Much of the strength of the reshoring trend has been due to more companies becoming familiar with a broad range of factors (costs and risks) they had previously ignored and rising concern over U.S. dependency on China. The savings on logistics costs and risks as a result of producing in the market in which the products will be sold can often overcome a 15-20% manufacturing cost gap caused by a 70% wage gap. Using the Total Cost of Ownership Estimator, iting and sourcing decisions is the best way to recognize these savings. The Impact of Using TCO shows that shifting decisions from a price basis to TCO can be expected to drive reshoring of 20% to 30% of what is now imported. shows that shifting decisions from a price basis to TCO can be expected to drive reshoring of 20% to 30% of what is now imported. Are you thinking about reshoring? Presently, shifting forces are creating more incentives and opportunities for companies to produce at home. Growing geopolitical uncertainty is driving companies to reshore additional product categories. Increased nearshoring of work from Asia to Mexico will require about 40% U.S. value added. Therefore, we expect 2023 and 2024 to remain strong, continuing at approximately 350,000 job announcements per year. Are you thinking about reshoring? For help, contact me at 847-867-1144 or email me at harry.moser@reshorenow.org.
A huge surge in electric vehicle (EV) batteries and semiconductor chips, combined with a continued trend in a broad range of industries, set off seismic waves of reshoring and foreign direct investment (FDI), resulting in the highest rate ever recorded.