China is facing a number of domestic issues including labor shortage, shipping and electricity. Prices there are rising at a record pace as a result of the inflationary forces hitting economies across the globe, including increasing wages and soaring energy costs. China’s official producer price index for the month of September showed a 10.7% increase over a year ago, following a 9.5% jump in August– the fastest increase since the mid-1990s.The U.S.-China relationship is facing additional issues: Taiwan and the possibility of decoupling.
While these issues will continue to cause problems for U.S. global supply chains, they are also propelling a long overdue push in the U.S. toward greater self-sufficiency. The U.S. trade deficit continues to rise. The deficit with China is up 10% from 2020, projected to reach $340 billion, which represents about 2.5 million manufacturing jobs. Recent reports from the Reshoring Initiative (Nov. 2021) indicate that the U.S. is starting to focus on key actions to pivot away from dependence on China.
Reshoring Initiative indicates that logistics managers are now beginning to pivot towards regional/domestic supply chains. The manufacturing industry plans to limit future disruptions by using advancements in technology, reshoring of production, and growth of the supply chain as-a-service business model. In the wake of ongoing global supply chain disruptions, a consortium of North American manufacturers has launched a new endeavor with the express intent to reverse the 5-decade trend toward offshoring. Its goal is intended to help the U.S. achieve balance with China.
Manufacturing executives expect the following five skills to increase significantly within the next 3 years: (1) technology/computer skills; (2) digital skills; (3) programming skills for robots/automation; (4) working with tools and technology; and (5) critical-thinking skills.
Shopping “Made in America” and sustainability are also found to be top of mind for consumers of all generations by Reshoring Initiative, with new data revealing: (1) that consumers are gravitating toward local shopping and American-made goods, and (2) that 63% of consumers want personal products and cosmetics to be made within the U.S. with 52% citing materials used in manufacturing as the reasoning.
Further, a recent survey of 1,000 U.S. respondents aged 18-24 found that the COVID-19 pandemic has had an impact on Gen Z’s perception of manufacturing. More than half of respondents (54%) said they had not considered frontline manufacturing as a potential career before the pandemic; while 24% are now open to it.
Classroom discussion questions:
- Why the move to reshoring now?
- How do your students feel about jobs in manufacturing and OM?