Developed Economies Experience Industrial Renaissance
Year after year, voters in post-industrial societies hear the same fruitless promises from political candidates who promise a return to manufacturing prowess. These candidates claim jobs were stolen and must be returned for economic success. They vow to reverse globalization in order to help the middle class. Yet 67,000 net manufacturing jobs were created last year in the United States. Since 2010, almost one million new factory jobs have been added to the economy, including 249,000 from overseas. 2014 saw the first net gain in manufacturing jobs in 20 years. Industry is recovering in a surprising and promising way, despite the fact that our leaders fail to recognize this improvement. Obsolete twentieth-century manufacturing jobs may be gone, but their replacements will propel developed economies to the forefront of industry once more.
At the beginning of the century, offshoring was the future. Wages were lower, regulations were looser, and labor forces in other countries were willing to take jobs which offered lower wages than in the US. Millions of manufacturing positions moved to developing economies like Mexico, China, and Vietnam. The Rust Belt seemed to be taking its last breaths. After the recession in 2008, most people wrote off American industry. Yet, since 2011, Walmart, Ford, and Boeing alone have brought over 10,000 jobs back to the United States. Corporations across the globe are following similar trends.
Reshoring, or reintroducing manufacturing processes to domestic economies, partly explains this phenomenon. In the last decade, advancing economies in East Asia and Latin America have witnessed higher wages, healthier regulations, and a growing middle class. Asian Tigers and other nations that boomed in the 1990s and 2000s have transformed into service-based economies, a sign of their economic maturity and induction to the developed world. This trend, coupled with movements against free trade and demand for domestically made products, has fueled a resurgent, modernized industrial economy in the United States, Western Europe, and Japan.
Politicians continue to cry for a recovery of manufacturing, despite its clear revival, because they do not recognize the new face of industry. Manufacturing is occurring with robotics and automation, not assembly lines and monotony. Developed nations have a major advantage in this style of manufacturing because they have educated populations, capital to invest in new technologies, the infrastructure to develop sophisticated machinery, and a strong desire to bring production back home. Countries like the United States, Germany, and Italy should incentivize development in the high-tech industry that is efficient and sustainable. The production of goods does not look like it did a century ago; today it is clean, sleek, and upscale. It is time for leaders to capitalize on reshoring and promote modern manufacturing. This way, developed countries can make reshoring a permanent trend that will rebalance and strengthen their economies.
The world economy is rapidly changing. Manufacturing-based economies are evolving into service-based ones, a cycle that previously occurred in the post-WWII decades. The demand for goods will not decrease any time soon; with manufacturing powers maturing, the time is right for developed economies to return to their industrial roots and experience economic rebirth. The next step for developed nations is to shift towards a technology-based economy that fuses multiple sectors. Countries that embrace the future of manufacturing can ensure economic strength for the decades to come.
Nabil is a freshman in the School of Foreign Service from San Antonio, Texas. He one day hopes to live his life among snow leopards in the forests of the North.