For decades, manufacturting jobs in the U.S. had been outsourced to Latin American and Asia. Many blame free trade agreements such as NAFTA but outsourcing began long before then, in the 1970s. Outsourcing is seen by many as a global “race to the bottom” in which what determines where manufacturing jobs lie is how low the workforce is willing to be paid. In order to adjust domestic workers resort to lower wages to compensate. The movement of manufacturing jobs back to the U.S. ironically during the Great Recession. Examples of companies building factories in the U.S. are Caterpillar, who is building a $120 million plant in Victoria, Texas. Masterlock has agreed to move 300 jobs back to the U.S. from China. General Electric (GE) has decided to reinvest in refurbishing existing facilities in the U.S. to be more environmentally friendly. Whirlpool has decided to build a $200 million plant in Tennessee instead of Asia. The result of insourcing has lead to a $40 billion increase in exports since 2010.
The question is of course why are companies relocating jobs to the U.S. rather than continuing to outsource to Asia or Latin America. Some point to the fact that China’s rapidly improving economy has led to an increase in salaries and expected salaries as well as new regulations and high energy costs have made the cost-cutting benefits of outsourcing neglible. However just because there is a growth of manufacturing jobs in the U.S. doesn’t mean that the U.S. will have as many manufacturing jobs before outsourcing. The main reason is because of robotics, well-progammed machines have lessened the quantity of factory workers needed to create the products. Rote assembly lines, low value-added manufacturing like textiles, furniture and heavy smelting operations like the steel industry may never again be profitable in the way they were after World War II. The labor force has always been able to adapt to new challenges and morph themselves into a workforce that meets the demands of future employers.