Manufacturing staffing to grow as companies bring jobs home

09.12.2012


Manufacturing staffing to grow as companies bring jobs home
Manufacturing staffing to grow as companies bring jobs home

Manufacturing staffing is expected to grow among U.S. metal industrial component makers and chemical producers as these companies begin to shift more manufacturing jobs back to the U.S. from Asia to offset higher shipping costs, a recent report from PricewaterhouseCoopers showed.

According to Reuters, PwC found that the higher cost of shipping is slamming manufacturers as domestic energy prices continue to fall due to a jump in natural gas production. Both the components-making and chemical industries will benefit from the lower energy prices since the average weight of their products makes them more costly to ship.

"The energy story is certainly game-changing for manufacturers," said PwC partner Bob McCutcheon, who specializes in industrial products. "Heavier manufacturing tends to benefit."

The recent actions of General Electric Co. and farm machinery maker Agco Corp. are evidence of this onshoring trend. According to the news source, both companies have shifted their manufacturing work back to the U.S. due to rising worker wages in China and to better respond to rapid fluctuations in demand for products. For such large and influential companies to begin bringing jobs back home suggests the reversal of a decades-long trend in which similar companies closed the doors at their U.S. facilities in an attempt to lower operating costs by employing foreign labor.

This trend has left its mark on U.S. manufacturing employment. In August, about 12 million U.S. workers were employed by manufacturing companies, a 3.6 percent rise compared with the 2010 post-recession low, according to the Bureau of Labor Statistics.

The improved manufacturing employment is especially pronounced in the steel sector, PwC noted. The report showed changes in labor and shipping costs indicate that in 2010, it was 2.1 percent cheaper to manufacture a steel pipe in the U.S. than it was to make it in China and ship it home. This is far from the scene in 2006, when it was 3.6 percent cheaper to employ an outsourced Chinese manufacturing facility.

In July, GE announced it would take on a new manufacturing staff at a facility in Kentucky after it relocated from Mexico - one of several examples of manufacturing jobs returning home. The company said it will take as many as 10,000 applications.