<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class=""><span style="font-family: Calibri; font-size: 11pt;" class=""><a href="https://www.goiam.org/news/no-companies-are-not-coming-back-to-the-u-s-after-years-of-offshoring-" class="">https://www.goiam.org/news/no-companies-are-not-coming-back-to-the-u-s-after-years-of-offshoring-</a>
2/</span><br class=""><div class="page" title="Page 1"><div class="layoutArea"><div class="column"><p class=""><b class=""><span style="font-size: 16.000000pt; font-family: 'Arial'; color: rgb(20.000000%, 20.000000%, 20.000000%)" class="">No, Companies are Not Coming Back to the U.S. After Years of </span><span style="color: rgb(51, 51, 51); font-family: Arial; font-size: 16pt;" class="">Offshoring</span></b></p><p class=""><span style="font-size: 16pt; font-family: 'Times New Roman'; color: rgb(51, 51, 51);" class="">Owen Herrnstadt</span></p><p class=""><span style="font-size: 11.000000pt; font-family: 'Arial'; color: rgb(16.900000%, 16.900000%, 16.900000%)" class="">August 11, 2020
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<img alt="page1image2608" width="31" height="0" apple-inline="yes" id="1E9C3D98-464D-421C-BA18-F6DF12ADC09B" apple-width="yes" apple-height="yes" src="cid:21BDF7A7-8433-4FC1-A620-136B1F7BC2AA@hsd1.pa.comcast.net." class=""><div class="layoutArea"><div class="column"><p class=""><span style="font-size: 14pt; font-family: 'Times New Roman';" class="">President Trump would have us believe that U.S. companies are flocking back to the
</span><span style="font-size: 14pt; font-family: 'Times New Roman';" class="">U.S. from their offshore locations, “</span><span style="font-size: 14pt; font-family: 'Times New Roman'; color: rgb(11, 49, 121);" class="">They’re </span><span style="font-size: 14pt; font-family: 'Times New Roman'; color: rgb(11, 49, 121);" class="">all coming back now. </span><span style="font-size: 14pt; font-family: 'Times New Roman'; color: rgb(11, 49, 121);" class="">They’re </span><span style="font-size: 14pt; font-family: 'Times New Roman'; color: rgb(11, 49, 121);" class="">coming
back to the United States</span><span style="font-size: 14pt; font-family: 'Times New Roman';" class="">.” Last week in </span><span style="font-size: 14pt; font-family: 'Times New Roman'; color: rgb(11, 49, 121);" class="">Ohio </span><span style="font-size: 14pt; font-family: 'Times New Roman';" class="">he claimed, “...we’ve made
</span><span style="font-size: 14pt; font-family: 'Times New Roman';" class="">extraordinary progress </span><span style="font-size: 14pt; font-family: 'Times New Roman';" class="">in reversing the tide...”. USTR Robert Lighthizer has
proclaimed on more than one occasion, “</span><span style="font-size: 14pt; font-family: 'Times New Roman,Bold'; color: rgb(11, 49, 121);" class="">The era of reflexive offshoring is </span><span style="font-size: 14pt; font-family: 'Times New Roman,Bold'; color: rgb(11, 49, 121);" class="">over</span><span style="font-size: 14pt; font-family: 'Times New Roman,Bold';" class="">,” </span><span style="font-size: 14pt; font-family: 'Times New Roman';" class="">backing up the President’s </span><span style="font-size: 14pt; font-family: 'Times New Roman';" class="">pronouncement. The facts, however, indicate
another story.</span></p><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">Take China for example. Data by the </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Reshoring Initiative</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">, one of the few
organizations that tracks these numbers, does not indicate that a massive number of
jobs are coming home from China for one major sector, manufacturing. Under
</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">industrial sector headings of “Transport equipment”, Machine Tools, Electrical
</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">Equipment, Appliances/Components, Apparel Textiles, and Medical
Equipment/Supplies for 2019 and the most recent data available for 2020, only a very
limited number of reshoring examples from China are cited. During this period, for all
of these categories combined, there were less than 4,000 jobs that companies
announced would be added to the U.S. workforce related to China. Almost all were in
transportation equipment while only a handful were in machine tools. No jobs were
listed as being reshored from China under any of the other manufacturing categories
for the same period.
</span></p><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">That means there is still a long way to go to make up for the 700,000 jobs lost to
China during the first two years of the Trump administration, and the 3.7 million jobs
lost over the past several years as reported by the </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Economic Policy Institute</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">.
Moreover, not all of the jobs that are listed as being reshored are set to be added in the
year that they were announced. Some like the 863 reshoring jobs at </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Mullen</span></p></div></div><div class="layoutArea"><div class="column">
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<div class="column"><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Technologies </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">are not to be fully implemented until 2026, seven years after the
announcement of the additional jobs.<br class="">
Even more disturbing is that many of the jobs categorized as reshoring were the result
of foreign direct investment </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">– </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">as opposed to U.S. companies moving their
investments, production and supply chains home. And remember, this data is
primarily based on announcements that jobs will be added, as opposed to the actual
number of company hires.
</span></p><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">As we know from Foxconn in Wisconsin, plans can change. Recall that </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Foxconn
</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">initially announced it would create 13,000 jobs in Wisconsin, in exchange for billions
of state dollars in subsidies. Later, the number of jobs that would be added was
reduced to substantially less, 1,500. As of April 2020, the Company reported that the
number of jobs it had in the state was far below 1,500 and even the number of jobs it
did report still needed to be verified by the state.
</span></p><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">One example listed in the data may actually tell the story about what is happening
when jobs move from China. It involves </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Haitian Huayuan</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">, a company that announced
it would reshore 300 jobs from China, not to the U.S., but to Mexico. The </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Kearney
Institute </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">suggested that while some jobs were moving out of China, they may not be
moving back to the U.S. Instead, jobs may be moving from China to Vietnam, other
Asian countries and notably, Mexico:
</span></p><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">2019 saw companies actively adapting to what then felt like a major disruption</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">—</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">the
US</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">–</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">China trade war</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">—</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">by reducing imports of manufactured goods from China while
increasing manufacturing imports from the other countries in our Asia LCC sample,
as well as from </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">Mexico.... </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">The US-China trade war and the recently ratified United
States-Mexico-Canada Agreement (USMCA) have accelerated production flow to
Mexico. </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">...When </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">viewed in combination with the sharp tariff-related decline in
imports from China, these figures strongly suggest that some US manufacturers have
used Mexico as a substitute source for manufactured imports.
</span></p><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">Even some of the successes touted by the administration do not tell the whole story.
Take Whirlpool for example. Last week, the president was in Ohio talking about all
the jobs that had been created by Whirlpool. He did not mention, however, that more
than </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">10,000 </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">jobs were now in Mexico contributing to Whirlpool’s products. Some of
</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">these jobs were moved to Mexico from the U.S. over the years. He also did not
mention exactly how the new trade agreement, USMCA, will bring back these jobs.
Nor could he, since there is little in the actual agreement that directly addresses the
outsourcing of production of kitchen appliances, aerospace, call centers, food
products, and other manufacturing and service sectors.
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</div><div class="page" title="Page 3"><div class="layoutArea"><div class="column"><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">The continuing large number of petitions for Trade Adjustment Assistance is further
indication that jobs are not moving back from other countries. It is also further
</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">indication that Trump’s trade policies have not made much of a dent in </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">U.S. jobs.
</span></p><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">The filing of </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">TAA petition</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">s were actually greater in 2019 than they were in 2017,
1,235 to 1,091 respectively. (They were nearly the same in 2018 and 2019, 1,273 and
1,235 respectively.) In 2019, TAA petitions were certified covering over 88,000
workers, down slightly from 95,505 in 2017 (up from 77,499 in 2018) but nowhere
indicating that current trade policy has turned things around. As in years past, a large
majority of TAA covered jobs also continue to be in the manufacturing sector.<br class="">
The simple fact is that contrary to what the president and other administration officials
</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">have been saying, not “all the companies are coming back to the U.S.”
</span></p><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">There are many reasons for this. As I have said </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">before</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">, one of the major reasons is the
lack of a comprehensive plan to bring these jobs home, to create jobs here and to
develop a sustainable manufacturing industry for the future. We cannot simply turn
around offshoring by doing what the current administration has done: tweeting out
tariffs and issuing </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Executive Orders </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">“encouraging” companies to use domestic
</span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">sourcing.
</span></p><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">All of this is why the recently announced </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Biden Plan to Ensure the Future Is Made in
All of America By All of </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">America’s </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'; color: rgb(4.310000%, 19.200000%, 47.500000%)" class="">Workers </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">is so refreshing. If implemented, it
would go a long way in turning around the offshoring of U.S. jobs and restoring the
U.S. manufacturing sector. Among other things, it includes five essential criteria that
are now missing from current efforts to bring manufacturing back:
</span></p>
<ol class="">
<li style="font-size: 14.000000pt; font-family: 'Times New Roman'" class=""><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Bold'" class=""><b class="">At long last, it provides a comprehensive solution for the continuing failure to
create and implement a plan for a robust and sustainable manufacturing
sector.</b> </span><span style="font-size: 14pt;" class="">The plan lays out specific proposals regarding strengthening and reforming
policies concerning government procurement, corporate tax, investment, trade,
apprenticeship and training, labor law reform, innovation, research and
</span><span style="font-size: 14pt;" class="">development and other critical matters. It is not based on merely “hoping” that
</span><span style="font-size: 14pt;" class="">companies will do the right thing to bring work home and create jobs here, it
reforms current policy to ensure that work </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">is </span><span style="font-size: 14pt;" class="">reshored and that jobs </span><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Italic'" class="">are </span><span style="font-size: 14pt;" class="">created here
at home.
</span></p>
</li>
<li style="font-size: 14.000000pt; font-family: 'Times New Roman'" class=""><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Bold'" class=""><b class="">It focuses on making current laws and regulations more effective for
rebuilding our manufacturing sector by creating demand for U.S.
manufactured goods. </b></span><span style="font-size: 14pt;" class="">For example, it calls for long overdue rules to strengthen
Buy American laws, which mandate that taxpayer money is used to buy goods and
materials made in the U.S. Although Buy American was enacted years ago during </span><span style="font-size: 14pt;" class="">the Great Depression, its requirements have been weakened over the years.
Currently, goods that have domestic content as low as 51 percent would qualify for
</span><span style="font-size: 14pt;" class="">many government purchases. Biden’s proposal calls for eliminating the game
</span><span style="font-size: 14pt;" class="">playing that can occur when federal agencies and companies determine what goes
into calculating domestic content </span><span style="font-size: 14pt;" class="">– </span><span style="font-size: 14pt;" class="">even if those calculations include factors that
can distort the real domestic content, like the value of intellectual property rights.
And it calls for eliminating the broad waivers that act as loopholes for Buy
American requirements.</span></p></li></ol></div></div></div><div class="page" title="Page 4"><div class="layoutArea"><div class="column">
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<li style="font-size: 14.000000pt; font-family: 'Times New Roman'" class=""><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Bold'" class=""><b class="">It invests in U.S. manufacturing and U.S. manufacturing workers.</b> </span><span style="font-size: 14pt;" class="">It calls for a
sizeable amount of funding, $400 billion, to invest in infrastructure, clean energy
and other projects. This will create much needed demand for U.S. products,
materials and labor. Most importantly, it will fund programs to fix our bridges
</span><span style="font-size: 14pt;" class="">before another one collapses, as well as our nation’s roads, airports, railways and
</span><span style="font-size: 14pt;" class="">schools.
</span></p>
</li>
<li style="font-size: 14.000000pt; font-family: 'Times New Roman'" class=""><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman,Bold'" class=""><b class="">It calls for a much needed $300billion investment in future manufacturing
focused on innovation, new technologies and advanced industries.</b> </span><span style="font-size: 14pt;" class="">It also
embraces the importance of ensuring that the manufacturing of goods produced
with the new technologies and innovations paid for by taxpayers remain here at
home, unlike some products which have been offshored like semiconductors; and,</span></p><p class=""><span style="font-size: 14pt;" class="">5. </span><span style="font-size: 14pt; font-family: 'Times New Roman,Bold';" class=""><b class="">It addresses the need to reverse critical supply chains that are now offshore.</b> </span><span style="font-size: 14pt;" class="">It
would provide credit to small manufacturers which are critical to supply chains,
end corporate tax rules that encourage offshoring, and strengthen apprenticeship
and training programs to make sure that we have the skilled work force that will be
needed.</span></p></li></ol></div></div></div><div class="page" title="Page 4"><div class="layoutArea"><div class="column"><p class=""><span style="font-size: 14.000000pt; font-family: 'Times New Roman'" class="">The Biden Plan is not perfect. A lot of details still need to be worked out. We also
know from experience that the path from laying out a vision to actual implementation
can be tortuous. But the plan represents a very strong start and is one that is welcome,
especially after years of unsuccessfully urging current and past administrations to
develop and implement a comprehensive manufacturing policy. It is also especially
welcome after hearing from the current administration that offshoring is over and that
U.S. companies are all coming back to the U.S., when they are not.
</span></p><p class=""><span style="font-size: 11.000000pt; font-family: 'Times New Roman'" class=""><a href="https://www.goiam.org/news/no-companies-are-not-coming-back-to-the-u-s-after-years-of-offshoring-2/" class="">https://www.goiam.org/news/no-companies-are-not-coming-back-to-the-u-s-after-years-of-offshoring-2/</a> </span></p>
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