(From the July 9, 2012, issue of Rubber & Plastics News)
WASHINGTON—The evidence clashing with claims of a reshoring-sparked U.S. manufacturing revival is accumulating so fast that it looks like piling on.
But the claims persist, so here's the latest reality check: New data that became public indicate that American industry lately has been outperformed by Europe.
Presenting results of an upcoming study from the consulting firm IHS Global Insight, a June 18 Financial Times article by manufacturing correspondent Peter Marsh showed that China's share of world manufacturing value-added jumped from 17.7 percent in 2010 to 19.9 percent in 2011. As a result, China-based manufacturing took the world lead from U.S.-based rivals, whose share declined from 19.2 percent to 18 percent.
So much for contentions that America is stealing the manufacturing march from China.
In a subsequent email to me, however, Marsh disclosed even worse news for the reshoring enthusiasts—and for all Americans. According to IHS, the economically troubled European Union's share of world manufacturing value-added dipped only from 20.9 percent in 2010 to 20.4 percent in 2011. Going back further (to 2007) reveals the EU share has fallen more rapidly than America's from a higher level (26.2 percent versus 21.2 percent).
But the last two years are those in which the reshoring narrative tells us American manufacturing began regaining its chops big time.
This new data represent only the latest set of figures thoroughly debunking the reshoring claims. To review quickly, all the while the reshoring anecdotes have multiplied—thanks in no small measure to President Obama—domestic American manufacturing kept running colossal and rising global trade deficits. Real wages in the sector kept falling. Chinese-made goods kept seizing shares of the U.S. market for advanced manufacturers.
An increase in U.S. manufacturing production that did begin once the last recession officially ended in mid-2009 started faltering noticeably this spring—way below the degree of reindustrialization needed by the American economy.
The economywide U.S. slowdown becoming apparent surely will slow manufacturing yet further.
And just recently, Bureau of Labor statistics data showed the prices of imports from China—again, the same China at whose expense much of the U.S. manufacturing surge supposedly was taking place—were rising much more slowly than the yuan's appreciation or the PRC's allegedly skyrocketing wages would indicate. Bottom line: The price competitiveness of Chinese goods in the U.S. market had barely budged.
In other words, the reshoring enthusiasts keep talking about American manufacturing competitiveness steadily beating back the Chinese challenge. But the facts indicate we should worry more about keeping up with economically reeling Europe first.
Tonelson is a fellow at the U.S. Business and Industry Council's Educational Foundation. This article appeared originally on its website, AmericanEconomicAlert.org.