“There aren’t any people to do the work,” Ulbrich told Business Insider editor in chief Matt Turner at the recent World Economic Forum.
Some corporations, like General Motors and Intel, have — to the delight of the Biden administration — already announced plans to shift more of their supply chains and manufacturing back to US shores, often called “on-shoring” or “re-shoring.” The US government is also investing billions of dollars to boost the domestic production of electric vehicles, semiconductor chips, and batteries.
Since 2020, the COVID-19 pandemic, Russia’s invasion of Ukraine, the world’s changing climate, and, more recently, the attacks by Houthi rebels in the Red Sea have thrown a wrench in global supply chains. These factors, along with mounting fears of a possible Chinese invasion of Taiwan, have persuaded some US businesses to bring the production of their goods closer to home.
On the other hand, Susan Golicic, a supply chain professor at Colorado State University, said that the types of manufacturing jobs created by on-shoring have typically paid more than many service industry jobs — and thus should be attractive to many Americans, whether they already have jobs or not.
Due in part to this near-shoring shift, Mexico eclipsed Canada and China last year to become America’s top trade partner, accounting for over 15% of goods exported and imported by the US. Last May, Mexico’s global exports were the second highest on record.
The labor costs of manufacturing in Mexico are also less expensive than in China, where manufacturing wages have risen in recent years, Andres Abadia, chief Latin America economist at Pantheon Macroeconomics, told BI. Mexico’s median age is roughly 30, he added — compared to nearly 40 in China — which has contributed to a strong labor supply.
But if the US wants to move the needle toward domestic manufacturing in the years ahead, there are a few steps it could take to boost its labor supply. Colorado State’s Golicic said businesses can provide competitive pay and benefits to attract workers — and may also need to resort to more contract or subcontract employees.
