'Reshoring' - Reverse Offshoring
June 30, 2012 (Charleston Gazette) Why has America's middle class lost ground, slipping downward in income and job security? Partly because many U.S. manufacturers laid off millions of high-paid blue-collar workers, closed U.S. factories and moved operations to low-wage nations in a process called "offshoring."
It boosted corporate profits - but it inflicted grief on millions of U.S. families and created a public sense that America can't make products any more.
For months, President Obama has been pushing a plan called "reshoring," to return manufacturing jobs to America. He hosted a White House conference and sponsored a bill in Congress to halt tax giveaways to unpatriotic firms that move jobs to low-cost places.
We hope this "Made in America" drive succeeds. In fact, we wish extreme tax penalties could be imposed on corporations that replace American workers with low-paid peasants in countries like Bangladesh.
Between 2000 and 2011, America lost 5.5 million manufacturing jobs - while U.S. firms added nearly 3 million overseas. Much of the outflow went to China, home of more than 1 billion people eager to work for a pittance.
But the stampede to China may be reversing. A recent Associated Press analysis cited "dramatic changes in China's economy." It listed these changes in Chinese furniture-making:
"Manufacturing workers' wages - 58 cents an hour, on average, in 2001 - were approaching $3. The once-abundant labor supply was drying up. Shipping costs were higher because of rising fuel costs. Quality was suffering because of high turnover. It could take three or more months to get a piece of furniture after it was ordered, compared with 30 days or less in the United States."
A 2011 report by the Boston Consulting Group estimated that by 2015, the cost advantage gained by moving U.S. jobs to China will be a mere 10 percent. That will be a "tipping point," making it almost as profitable to locate manufacturing in America, the report said.
New Jersey's Legislature is pondering a bill to force call- center operators to refund state tax breaks, loans or grants if they switch operations to foreign phone-answerers. The Philadelphia Inquirer commented: "The New Jersey bill passed the Assembly in March despite strong opposition from Republicans who apparently favor exporting jobs overseas."
This week, The Washington Post revealed that Mitt Romney's Bain Capital invested in several U.S. firms that created out-of-country call centers. In response, the GOP presidential candidate said the Post "confused offshoring with outsourcing." President Obama quickly shot back that there's little difference, because both mean sending American jobs elsewhere. "If you're a worker whose job went overseas," the president said, "you don't need someone trying to explain to you the difference."
Vice President Joe Biden wisecracked that Romney "is a job-creator - in Singapore and China and India."
We think the strongest possible tax penalties should be imposed on all U.S. corporations that callously lay off American workers and send the work to cheaper locales.