Pros And Cons Of Offshoring

A major argument in today’s society has been the topic of reshoring, especially under the new president administration. Reshoring can be simply defined as the practice of transferring a business operation that was moved overseas back to the country from which it was originally relocated. The loss of American manufacturing jobs to foreign labor (offshoring) has been a crucial topic of the new presidential administration. Offshoring has historically been the norm for American multinational corporations (MNC). This assumption can be made because these corporations were utilizing advantages specific for the offshore location, such as, low labor cost, technological advancements, and etc. This trend of offshoring was allowing companies to gain

American manufacturers “benefitted from productivity and cost competitiveness that continued through the Industrial Revolution and up to the 1950’s(Defining the Reshoring Discussion). Overtime, foreign countries got stronger causing there to be changes in the international business environment making it more competitive and challenging. Majority of American corporations began to struggle to keep its cost and productivity advantage on a global level. Some American corporations were able to be sustainable by shifting focus. For example, some American manufacturers switched “focus to complex, high-value products and industries—and increasing manufacturing investment, output, and employment” (Defining the Reshoring Discussion). Others either could not compete, which forced them to close or do some or all offshoring. This created the trend of offshoring and caused a major decline in the U.S.

Currently, labor costs and currency rates in places like China are increasing and shipping cost remains high. This has made reshoring more beneficial and attractive for some corporations. In addition, the government and our new presidential administration are trying to make it more attractive for American corporations to reshore by trying trade policies. They are also trying to education citizens on how it could impact our economy. This assumption can be made because sometime last year the International Economic Development Council (IEDC) received a grant from the U.S. Economic Development Administration to "examine current reshoring practices and create materials to spread awareness of reshoring trends, tools and resources that are available to ease the process”(Reshoring Has Become an Economic Development Strategy). The IEDC is a non-profit organization serving economic developers. The organization mission is to “promote economic well-being and quality of life for their communities, by creating, retaining and expanding jobs that facilitate growth, enhance wealth, and provide a stable tax base”(Reshoring Has Become an Economic Development Strategy). This illustrates how the U.S. is trying to make reshoring jobs a top priority by creating awareness and funding organization with expertise it economic development