Deloitte Debate: Time to Bring Manufacturing Jobs Back to the U.S.?

NEW YORK, Nov. 17 /PRNewswire/ –

What: “Manufacturing Jobs: To Repatriate or Not to Repatriate? That is the Question”

Who:

Dmitri Shiry, partner, Deloitte LLP

Tom Morrison, principal, Deloitte Consulting LLP

Todd Izzo, partner, Deloitte Tax LLP

When: Available immediately

Where: http://www.deloitte.com/us/debates/bringjobshome

Details:

The gap in structural costs between United States and offshore manufacturing has closed by almost half in the past three years. Some industry analysts say this trend creates new strategic options for facility and supply chain planning. Others argue that two of the structural drivers, energy costs and taxes, will make it impossible for U.S. manufacturing to regain a competitive advantage. So does this signal that it’s time to start bringing manufacturing jobs back to the U.S.?

“The fact that the gap closed in just two years is meaningful change and some companies are looking hard at jumping on the repatriation bandwagon,” said Shiry. “This is especially true for those where the intellectual property and quality risks of offshore operations offset the benefits of lower manufacturing costs. If the U.S. is going to reestablish manufacturing as a catalyst for growth during the next cycle of economic recovery, that trend will need to continue and expand.”

Shiry noted that one reason for the improvement is that other countries are experiencing increases in non-wage costs. Canada and the United Kingdom are seeing health care benefits go up as supplemental private insurance becomes more popular. Increasing tort claims are impacting other European countries, and China is being affected by rising pollution control requirements.

“Another factor is that some costs in the U.S. are easing,” Shiry added. “Domestic manufacturers have managed benefit expenses by moving toward less expensive defined contribution plans. For some manufacturers, though, the double hit of high energy costs and taxes can trump all other considerations. And, unless policy-makers align incentives to encourage the repatriation of jobs, today’s positive trends could be short-lived.”

Morrison and Izzo fuel the debate with perspectives regarding talent and tax, respectively:

• Talent. Manufacturers are facing a global talent crisis. The crisis is not about the availability of workers for jobs that require technical skills. It is about a mismatch of the availability of these skills where manufacturers want them most. Companies and communities with plans and a commitment to skills development and retention will likely have a leg up.

• Tax. Taxes can play an important role in encouraging companies to expand in the U.S. If the U.S. were to adopt tax policies that encouraged domestic investment in capital and labor, such actions could further reduce the structure gap in costs between U.S. firms and their foreign competitors. Congress has an opportunity in the next few years to strengthen U.S. manufacturing by shifting the conversation about raising business taxes into a serious conversation about fundamentally reforming business tax rules to encourage investment in labor and capital.

To view Deloitte’s points and counterpoints regarding manufacturing jobs and related issues, please go to http://www.deloitte.com/us/debates/bringjobshome.

This topic is one in a series of Deloitte Debates that examine today’s pressing business issues from multiple perspectives. New debate topics are added weekly. For a full library of Debates, please visit www.deloitte.com/debates.

To schedule an interview, please contact Allyson McKenney at +1 203 708 4406, amckenney@deloitte.com or Britton Josey at +1 404 220 1334, bjosey@deloitte.com.

About Deloitte

As used in this document, “Deloitte” means Deloitte Consulting LLP, Deloitte Tax LLP and Deloitte Services LP, separate subsidiaries of Deloitte LLP. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.

    Allyson McKenney              Britton Josey
    Public Relations              Public Relations
    Deloitte                      Deloitte
    +1 203 708 4406               +1 404 220 1334
    amckenney@deloitte.com        bjosey@deloitte.com

SOURCE Deloitte