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A huge surge in electric vehicle (EV) batteries and semiconductor chips, combined with a continued trend in a broad range of industries, set off seismic waves of reshoring and foreign direct investment (FDI), resulting in the highest rate ever recorded. Jobs announced in 2022 were a record-breaking 364,000 jobs, a 53% increase from the 2021 record high (Figure 1).
The total number of jobs announced since 2010 is now nearly 1.6 million. New investments in U.S. manufacturing by domestic and foreign companies accelerated even more than anticipated due to the Inflation Reduction Act (IRA), the Chips and Science Act (CHIPS)Figure 1. Manufacturing job announcements per year, reshoring + FDI, 2010-2022. Source: Reshoring Initiative and de-globalization trends. EV battery and semiconductor investments account for the largest increases in job announcements (53%).
Top states —catching large “elephants”
In 2022 New York had the highest job announcements. Every year top states are driven by catching large “elephants.” In this case, New York scored big projects by Micron’s $100,000 billion chip plant (9,000 jobs) and EV battery manufacturer Imperium3 (5,500 jobs). Ohio, Georgia, and Tennessee ranked second, third, and fourth for new jobs. California had the most individual company cases but was only thirteenth on jobs, not catching many “elephants” (Figure 2).Figure 2. Reshoring + FDI by state, 2022. Source: Reshoring Initiative
Mitigating supply chain risk and uncertainty
Supply chain gaps and the need for greater self-sufficiency set the stage for the current upward trend in reshoring. The risks of a Taiwan-China conflict or China voluntarily decoupling are focusing those concerns. Destabilizing geo-political and climate forces have brought to light our vulnerabilities and the need to address them.
The White House responded with the IRA, CHIPS, and the Bipartisan Infrastructure Bill, offering some direction and financial security to the companies and industries intent on filling the gaps.
Top industries that reshored and FDI’d
Green energy investment from domestic and foreign companies has been surging in the U.S. EV batteries were the most active product reshored/FDI’d in 2022. The share of jobs announced by electrical equipment, including EV batteries, went from 3% in 2019 to 44% in 2022. In 2022 there were 146 battery-related cases that account for 105,000 jobs announced, including the supply chain.
The second largest industry was computer and electronic products. It continues to grow, pushed in recent years by solar panels, robotics, drones, and most recently, semiconductors. In 2022 there were 61 cases of semiconductor/chips, with 28,800 jobs announced.
To date, over fifty new semiconductor ecosystem projects and $210 billion in private investment have been spurred on by the CHIPS and Science Act of 2022, which will reduce dependence on critical technologies from China and Taiwan.
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 (Figure 3).
Figure 3. Reshoring + FDI by industry, 2019 vs. 2022. Source: IMTS+
Comprehensive actions for cost competitiveness
CHIPS and the IRA are necessary in the short term but are not sufficient long term since they do not improve the U.S. anticompetitive cost structure. The current actions and momentum are a great start, but the U.S. cannot afford to offer hundreds of billions of dollars to new incentives every year. A true industrial policy would accelerate the trend and increase U.S. manufacturing by 40% or five million jobs.
We suggest an industrial policy that would level the cost-playing field via comprehensive actions such as massive skilled workforce investments, a 25% lower USD and immediate expensing of capital investments. We encourage the U.S. to become competitive on all tech levels to balance the trade deficit and employ a broader range of workers.
The Reshoring Initiative is available to help government policymakers establish a more effective, lower cost industrial policy to bring millions more jobs back. We also help companies make the right decision on whether to reshore their products.
Priorities shift to resilience, but cost is still a priority
Much of the strength of the reshoring trend has been due to more companies becoming familiar with a broad range of factors (costs and risks) they had previously ignored and rising concern over U.S. dependency on China. The savings on logistics costs and risks as a result of producing in the market in which the products will be sold can often overcome a 15-20% manufacturing cost gap caused by a 70% wage gap.
Using the Total Cost of Ownership Estimator, iting and sourcing decisions is the best way to recognize these savings. The Impact of Using TCO shows that shifting decisions from a price basis to TCO can be expected to drive reshoring of 20% to 30% of what is now imported. shows that shifting decisions from a price basis to TCO can be expected to drive reshoring of 20% to 30% of what is now imported.