Ohio-based organization Heartland Forward recently released a study titled, “Reshoring America: Can the Heartland Lead the Way?” The organization’s mission is to improve economic performance in the geographic center of the U.S. In the study co-authored by Joel Kotkin, Michael Lind and Dave Shideler it asserts that, although the pandemic has had overwhelming impacts, the offshoring issue extends beyond current pandemic concerns, reaching far larger and more permanent concerns over industrial supply chains, worker training and even national security.
Many domestic and foreign companies are recognizing the strategic advantages of locating in the U.S, such as protecting intellectual property, shortening supply chains and shrinking wage differentials between the U.S., China and other overseas locations. Some estimates suggest that firms fail to accurately estimate the costs of production in other countries by as much as 20 percent.
Considering these additional costs, experts suggest that 10-30 percent of projects considering locating production outside of the U.S. would find that it would be cheaper to remain or expand within the country. As a result, jobs stemming from reshoring activity are estimated to have reached over 400,000 in 2019, and that number is expected to grow.
The U.S. Heartland stands to benefit the most from reshoring activity, the organization believes. Because of its historic dependence on manufacturing, there remains a culture, skilled labor pool and training programs, as well as infrastructure to support production facilities. The presence and diversity of existing manufacturing throughout the region also supports reshoring activity, since domestic suppliers are available and proximate.
“Bipartisan support for reshoring has never been stronger in Washington,” the report says. “We have seen that reshoring activity will require more than tariffs and renegotiation of trade agreements. Instead, policies encouraging the behavior will also be needed, so that ‘carrots and sticks’ are an integral part of the policy framework.”
Joel Kotkin, principal author, is a Senior Fellow at Heartland Forward. He is the RC Hobbs Presidential Fellow in urban futures at Chapman University, director of the Chapman Center for Demographics and Policy, and executive director of the Center for Opportunity Urbanism in Houston, Texas.