U.S. Manufacturing Up; Reasons for Outsourcing Down

U.S. Manufacturing Up; Reasons for Outsourcing Down

Manufacturing jobs in the U.S. have grown by just over 3 percent in the past two years, according to a report released today by the Brookings Institution. And while that number seems minute compared to the dramatic nationwide losses since the end of the 1970s, there’s evidence that manufacturing is on the path for a long-term rebound.

Between January 2009 and December 2011, the country gained about 350,000 manufacturing jobs, with the fastest growth occurring in the Midwest, according to the report. Along with the South, Midwestern states had suffered huge job losses — sometimes exceeding 40 percent — in the manufacturing sector between 2000 and 2010.

But the recent uptick in manufacturing isn’t confined to any particular location, indicating a trend that manufacturers, when choosing where to set up shop, no longer place such an emphasis on access to low labor costs and generous local subsidies. Instead, noted report co-author Howard Wial, they now tend to look for access to skills and resources for research and development. (This may account for why metro areas have, as the report explains, become more and more specialized in the past few decades.)

Perhaps the study’s most lasting implication is that manufacturers have increasingly fewer reasons to outsource their operations to foreign countries. Though labor costs in China still remain well below those in the U.S., they’ve been rising more rapidly than ever in recent years. Add that to transportation costs and the fact that the Chinese yuan has risen in value, and manufacturers have a pretty convincing case to think twice before following in Apple’s footsteps.

Metropolitan areas continue to lay claim to nearly four-fifths of all manufacturing jobs in the U.S., and that number rises to a whopping 95 percent when narrowed to include only jobs in what the report terms “very high-technology” manufacturing (think computers, pharmaceuticals and aerospace equipment). These industries, which now make up over 15 percent of manufacturing jobs in the U.S., are mostly clustered on the West Coast and in the Northeast.

However, the report also found that the central counties of metro areas have continued to lose jobs to non-metropolitan counties, where most of the growth since 2000 occurred. Wial explained that the mere need for factory space doesn’t account so much for this trend, as the size of your average manufacturing plant has shrunk. Instead, he credits it to factors like federal highway subsidies and zoning laws.

So if cities and metro areas want to encourage further insourcing, they could do well by paying more attention to topics frequently discussed in the urbanist realm.

Tags: jobswashington, d.c.technologymanufacturingchina

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