The Problem with Onshoring

I have dutifully covered the current rage about how we must onshore industry and manufacturing. What objection could anyone have to bringing business back to America?

Congress has been passing laws and doling out money for infrastructure projects and for new factory construction. How can anyone oppose that?

And yet, as I have occasionally noted, with precious little real evidence, it is not self-evident that we have the human capital to do the jobs. It’s nice to have the money and even the good intentions, but if you do not have the people, you are whistling in the dark.

Yesterday, the Financial Times reported on the simple fact that in many cases our workforce is not up to the new jobs. I cannot link the FT, so I will quote their observations at length.

As it happens, no one else has been reporting this story, so I am happy to bring it to your attention.

First, as regards infrastructure spending:

Con­struc­tion com­pan­ies are warn­ing that the Biden admin­is­tra­tion’s plans for a massive infra­struc­ture boom are on a col­li­sion course with a tight labour mar­ket. One industry group says the coun­try is short of 500,000 work­ers, des­pite plans for $1.2tn in spend­ing on projects from chip­mak­ing to clean energy. 

Immig­ra­tion reform to meet demand is unlikely. ‘A shovel-ready project with nobody to oper­ate the shovel is worth­less,’ says one observer.

A short­age of con­struc­tion work­ers is put­ting at risk Joe Biden’s plans to fuel a his­toric build­ing boom in the US, accord­ing to industry exec­ut­ives.

Similarly with manufacturing… and especially with our wish to compete with China:

The pres­id­ent has signed off on spend­ing of more than $1.5tn to boost the nation’s infra­struc­ture and catch up with China in man­u­fac­tur­ing. But after dec­ades of off­shor­ing and dis­cour­aging Amer­ic­ans from voca­tional work, con­struc­tion com­pan­ies warn that the coun­try’s indus­trial policies and labour mar­ket are on a col­li­sion course.

The US will need an extra 546,000 work­ers on top of the nor­mal hir­ing pace this year to meet labour demand, estim­ates the ABC. 

Con­struc­tion job open­ings aver­aged a record 391,000 in 2022, up 17 per cent on the pre­vi­ous year, the Bur­eau of Labor Stat­ist­ics said.

“We’re put­ting mil­lions and mil­lions of dol­lars into infra­struc­ture without any­body to install it,” said Ed Brady, chief exec­ut­ive of the Home Build­ers Insti­tute, a non-profit organ­isa­tion that pro­motes con­struc­tion train­ing. “A shovel-ready project with nobody to oper­ate the shovel is worth­less.”

The fed­eral stim­u­lus includes $1.2tn in infra­struc­ture spend­ing, $369bn from the Infla­tion Reduc­tion Act for clean energy projects, and $39bn from the Chips and Sci­ence Act to spear­head the coun­try’s pro­duc­tion of semi­con­duct­ors.

A ton of money and no one who is capable of doing the jobs. Somehow or other training children to be social justice warriors does not prepare them for these jobs:

Des­pite increas­ing wages, 80 per cent of con­struc­tion com­pan­ies say they are strug­gling to hire work­ers, accord­ing to a sur­vey by the Asso­ci­ated Gen­eral Con­tract­ors of Amer­ica last month.

In Colum­bus, Ohio, Intel has pledged $20bn to build two semi­con­ductor factor­ies, and Honda is build­ing a $4.4bn bat­tery plant with LG Energy Solu­tion. The projects will require nearly 10,000 con­struc­tion work­ers.

“The entire state of Ohio does not have the num­ber of pro­fes­sion­als to per­form this alone,” said Cath­er­ine Hunt Ryan, man­u­fac­tur­ing and tech­no­logy pres­id­ent of Bechtel, one of the com­pan­ies build­ing Intel’s factor­ies.

Put those facts in your hookah and smoke them. And wipe that smirk off of the faces of those who are filling the airways with optimistic accounts of how we are going to upgrade our infrastructure and compete over semiconductor production.