Encouraging news on re-shoring, for the US at least

Finally, the US presidential election is over, and already one of the issues debated seems to be resolving itself. Both candidates talked of outsourcing, and President Obama made the topic a primary part of his standard stump speech, saying he would work to bring outsourced jobs back home. And now, it seems, some of those jobs are coming back to the US. Are his plans working so soon, just a week after the election? No.

But that’s not to say his plans, like tax incentives, are bad. It’s just that procurement and other executives at some US companies have been slowly taking steps to re-shore jobs for a while because they see some economic advantages to doing so. And some companies outside the US are sending jobs to the US too.

According to a Bloomberg Business Week report, Indian companies Infosys and Tata Consultancy Services are outsourcing call-center and other service jobs to the US, and US giants such as GM and GE are repatriating jobs too.

Likewise, European commercial jet manufacturer Airbus will double its purchases of US components and open a manufacturing training center in Ohio, Airbus vice president of procurement David Williams told the Dayton Daily News.

The training would be helpful. Many analysts have been saying that US workers lack the kinds of technical skills, knowledge, and experience that are essential for much manufacturing work. But the gap between worker skills and manufacturers’ requirements could be overblown, according to a recent study by The Boston Consulting Group (BCG). The consulting group’s analysis, part of its Made in America, Again series, concluded that the skills shortage applies to only one percent of US manufacturing workers and should not affect the country’s ability to create millions of US manufacturing jobs this decade.

Procurement’s role in the outsourcing-vs-re-shoring debate is obvious: It’s still about looking for the best total value, wherever that may come from. Cost is only one part of that value, and even there procurement should be looking for the hidden costs that can surprise everyone when buying components or manufacturing services anywhere.

Does procurement have a role in the manufacturing-skills debate? Indirectly, perhaps.

CPOs can encourage their suppliers to work with technical schools and apprenticeship programs to find potential job candidates and help them develop the skills necessary for work in high-tech manufacturing. And they can do the same with their HR colleagues in their own companies. It’s one more way procurement can make its influence felt throughout the organization.

Paul Teague is US contributing editor of Procurement Leaders. To subscribe to the magazine, click here.