The U.S. lost 3.4 million manufacturing jobs between 2000 and 2007, and a further 1.5 million between 2007 and 2016 — much of them to offshoring.
More recently, however, factors such as the Trump administration’s trade policies, increased risk and disruption associated with global supply chains, and rising labor costs overseas have contributed to a growing trend of reshoring.
Reshoring in 2018 saw 145,000 manufacturing jobs created in the U.S. and foreign direct investment increase by 38%. According to the Reshoring Initiative, this is the highest level of investment — and the second-highest annual rate of job increases — ever recorded.
The world’s largest aerospace manufacturer, Boeing, has certainly experienced its fair share of problems caused by questionable offshoring decisions, which is perhaps why the company has invested significant efforts in moving production back home.
What Went Wrong with the Production of Boeing’s 787 Airliner?
Boeing opted to outsource the manufacturing of several crucial components of the 787 airliner to suppliers in Italy, Sweden, China, and South Korea. Boeing’s planes had typically consisted of 5% foreign-made components, but the production of the 787 saw this increase to 30%. The company hoped it would be able to reduce costs from $10 billion to $6 billion and manufacture the 787 in four years (down from six).
However, the company’s lack of effective risk mitigation led to one disaster after another including brake issues, fuel leaks, and overheating batteries. By 2013, production of the 787 was way behind schedule and Boeing was billions of dollars over budget. Of the 848 planes sold, only 6% had been delivered.
Boeing learned some valuable lessons off the back of its 787 production disasters — not least that the production and assembly of a highly complex product cannot be easily outsourced.
Since then, the company has launched several reshoring initiatives.
In 2014, Boeing announced it plans to reshore 3,000 manufacturing jobs to its Defense, Space, and Security division headquarters in St. Louis, Missouri. This involved expanding the facility to take on the production of several components of Boeing’s 777X series passenger jets.
Bob Ciesla, Boeing Military Aircraft Cross-Enterprise Design/Build VP, said: “Placing this work in St. Louis optimizes resources, skills, and technology in St. Louis and creates high technology jobs in the region.”
The final assembly of the 777X took place at the company’s one-million-square-foot facility in Everett, Washington. Boeing’s reshoring efforts were expected to extend further to multiple states, including its assembly plant in Puget Sound, Washington.
A new study was released ranking U.S. organizations that have committed to reshoring their manufacturing. Boeing was listed in third place behind Apple and General Motors with the reports showing the company had reshored a total of 7,725 jobs.
Boeing opened its first overseas plant in Zhoushan, a Chinese port city 90 miles from Shanghai. The facility is a joint venture between Boeing and Commercial Aircraft Corp of China (COMAC). Boeing’s decision was considered controversial amidst the continuing pressure for businesses to create manufacturing jobs on U.S. soil. However, Boeing defended its actions, explaining that the majority of manufacturing would still take place in Washington, and only planes being sold in China would be sent there for final detailing.
In January 2019, Boeing released its annual employment figures for 2018, which revealed the company’s employment had grown for the first time in six years. This included 4,000 new jobs in Washington state and almost 9,000 companywide.
COVID-19 and Beyond
Boeing has suffered immensely at the hands of the COVID-19 pandemic. In the first quarter of 2020, the company reported a $641 million loss and revealed plans to cut back on production and reduce its global workforce by 10%.
With a complex supply chain of more than 17,000 manufacturers, cuts to Boeing’s production line will have major ramifications for the industry.
A recent survey by Supply Chain Dive indicated that 64% of manufacturers expect reshoring to be one of the most likely consequences of COVID-19. Boeing might well take years to recover from this current crisis but when it does, the focus on reshoring might be even greater.