Q3 data is in, and it shows reshoring + FDI job announcements were at the highest rate ever recorded, about 15% above Q1 2022, the previous record. This is according to a new report from Reshoring Initiative.
The effect of this reshoring on jobs is strong. The group notes the current 2022 projection of jobs announced is a record-breaking 350,000 - up from 255,000 in 2021. Taking a historic look, this project will bring the total number of jobs announced since 2010 to over 1.6 million.
Driving the reshoring expansion is the passage, in Q3, of the Inflation Reduction Act and Chips and Science Act and the $393 billion expenditure.
“Historically, incentives have primarily come from cities and states and are enough to influence the U.S. factory site selected but not enough to overcome cost differences vs. low labor cost countries,” the report notes. “These federal grants are enough to overcome those differences, at least in the short term. “
Top Industries, and the Products Driving Them
Essential product industries continue to dominate reshoring and the manufacturing economy. In Q3 Electrical Equipment driven by EV battery investment remained the top industry. Computers and Electronics (including semiconductors and chips) moved to second, bumping Transportation to fourth place. Chemicals moved up to third place, driven by pharmaceuticals and materials contained in EV batteries.
The report’s analysis of this as is follows:
So far, electric vehicle batteries are the most active product to be reshored in 2022. Since they were categorized with the NAICS code of Electrical Equipment, that category has taken the number one ranking from Transportation Equipment, even though it still applies to the transportation industry. Transportation Equipment (mainly cars) was previously driven by FDI and has slowed with FDI since the pandemic and chip shortages. The investment in batteries is booming, in the attempt to obtain needed supply and not be dependent on Asian, especially Chinese, imports. Electrical Equipment’s share of jobs announced went from 3% in 2019 to 44% in 2022. So far in 2022, there are 146 battery-related cases that account for 105,000 jobs announced, including the supply chain.
The second largest industry in 2022 is Computer and Electronic Products. The growth in this sector comes from solar panels, robotics, drones and most recently, semiconductors. In 2022 there have been 61 cases of semiconductor/chips, with 28,800 jobs announced - most late in the third (and fourth) quarters, following the announcement of the Chips Act.
In third place is Chemicals, driven by pharmaceuticals, specifically vaccines and COVID-19 treatments, renewable fuels like hydrogen, and rare earth-based chemicals required for batteries.
“The current actions and momentum are a great start. A true industrial policy would accelerate the trend and increase U.S. manufacturing by 40%, 5 million jobs. Reshoring will reduce the trade and budget deficits and make the U.S. safer, more self-reliant and resilient,” said Harry Moser, Founder and President of the Reshoring Initiative.
Note: The report provides both current and future analysis. Click here for details.
