The move is good news for South Carolina—where the unemployment rate stood at 9.9 percent in November 2011—and, indeed, for the country as a whole. Otis is one of a growing number of manufacturers that have decided to bring production back to the United States from overseas.
According to a report released last month by the White House, real business fixed investment has grown by 18 percent since the end of 2009. In the past two years, 334,000 manufacturing jobs have been created, while manufacturing production has increased by 5.7 percent on an annualized basis since its low in June 2009. That’s the fastest pace in a decade.
While reshoring is laudable for its own sake, recent economic conditions have produced sound business reasons for bringing work back home, too. Freight costs and overseas labor rates are rising. And even the Chinese yuan is inching up in value, from $0.152 in January 2011 to $0.158 in January 2012.
Seizing the moment, the Obama administration is trying to promote more insourcing of jobs by U.S. companies after decades of outsourcing to foreign countries. At a forum hosted by the White House last month, the Obama administration announced steps to encourage more factory construction in the United States and more investment here by foreign companies.
“Today I am meeting with companies choosing to invest in the one country with the most productive workers, best universities, and most creative and innovative entrepreneurs in the world: the United States of America,” Obama said prior to the forum. “And I’m calling on those businesses that haven’t brought jobs back to take this opportunity to get the American people back to work.”
During the forum, Obama said his administration would soon propose new tax provisions to reward companies that bring back jobs to the United States or make new investments here. At the same time, the administration would move to eliminate tax breaks for companies that ship jobs overseas.
The White House noted that although many other countries solicit business investment at the national level, the United States traditionally has left that job to the states. The Obama administration is trying to change that.
Last year, it launched a program called SelectUSA to work with states to promote business investment. In addition, the Commerce and State departments will launch a pilot program in 10 countries to encourage businesses there to invest more in the United States.
We applaud the Obama administration for encouraging investment in domestic manufacturing, and we urge U.S. companies to carefully consider the total costs of offshoring when deciding where to make their products. The time is right for reshoring.