Along with cries to 'buy American', many US companies are coming home after years of manufacturing abroad, particularly in China. While many claim that their reason for reshoring is because of the rising cost of labour overseas and concerns about intellectual property rights, Mark Muro, senior fellow and policy director, and Siddharth Kulkarni, senior research assistant in the metropolitan policy programmes arm of Washington, DC-based think tank Brookings Institute, report that many companies are finding that making this move is not easy.

Many companies that moved their manufacturing operations overseas when the offshoring trend began some 30 years ago are learning that many homegrown skills have been lost, resulting in a dearth of local know-how and supply chain capacity. As a result, Mr Muro reported, a number of high-profile reshorings have either been difficult or unsuccessful. Examples include General Electric’s return to Appliance Park in Louisville, Kentucky, and Google and Flextronics’ effort to assemble the MotoX smartphone in Fort Worth, Indiana.


“In these cases, the erosion of the local knowledge, skills and supplier base has greatly complicated the scale-up of returning firms,” he said.

To come to their conclusion, Mr Muro and Mr Kulkarni analysed Brookings’ analysis of data provided by Moody's. Their analysis pointed to a number of facts. The first was that, in 1980, 59 of the 100 largest metropolitan areas in the US had at least 10% of their workforce in innovative, technical advanced industries. By 2013, however, only 23 major metros contained such sizable concentrations of advanced industry activity. The second was that less than half as many large metro areas in the US have the density of advanced industry activity that they had in 1980.

No doubt, technological change and productivity increases have evaporated the need for some skills in industry. Take robots replacing certain manual labour, for example. But, the Brookings' report determined that other countries that benefited from being recipients of US offshoring grew their employment base substantially in advanced industry sectors.

Consequently, less than half as many large metro areas in the US have the density of advanced industry activity that they had in 1980, the report concluded. “That means that on balance many fewer US metropolitan areas now have the dense supplier bases and deep pools of technically relevant workers necessary to support new advanced industry growth,” Mr Muro said.