The true cost of reshoring factories and bringing jobs

HostWe see those three words, made in the USA, and it feels like a promise that things are finally coming back. For a long time, it seemed like everything we bought was made on the other side of the world, but now there are these massive construction sites for chip plants and battery hubs popping up all over the place. I want to dig into what this actually costs us because it feels like there has to be a catch. Why is it suddenly so important to build things here, and what are we giving up to make that happen?

GuestIt really comes down to a big change in how we think about risk. For thirty years, the only thing that mattered was the lowest possible price. If a factory in a far-off country could make a part for ten cents less, the work went there. But the last few years showed us that a cheap price doesn't matter if the ship gets stuck or a war breaks out and the parts never arrive. So, companies are moving back, but the sticker shock is real. Building a high-tech factory in a place like Arizona or Ohio can cost billions more than building it in Asia. You have to clear land, deal with much stricter rules, and pay for power and water that often cost a lot more than they do in developing nations.

HostBut if it costs billions more to build the plant and the power is more expensive, that money has to come from somewhere. Does that mean we should just expect to pay more for every phone and car we buy?

GuestThat's the trade-off. We're choosing to stay safe over being cheap. When you make a computer chip in the US, the person working in that plant might make five or ten times what a worker in a different country makes. You can’t just swallow that cost. Companies either have to raise their prices or get the government to help pay the bills. Right now, the government is handing out hundreds of billions of dollars in tax deals and cash to get these companies to stay. So, in a way, you might not see the full price on the tag at the store, but you're paying for it through your taxes. It's a massive bet that having the factory nearby is worth the extra weight on the public wallet.

HostI hear a lot of people say this is how we save the middle class by bringing back those old-school factory jobs. But if we're paying so much more for labor, won't companies just use as few people as they can?

GuestYou hit on the big secret of this whole move. The factories coming back aren't the ones from the nineteen-seventies. They're incredibly high-tech. If a company is going to pay US wages, they're going to make sure they only hire a few people to watch over a thousand robots. We see these headlines about a new plant bringing three thousand jobs to a town, and that sounds great. But when you look closer, a lot of those are for building the place. Once the doors open, the actual work is very different. You aren’t standing on a line putting a screw into a board all day. You're a technician with a degree making sure the software for the robotic arm is running right.

HostSo the dream of a high school graduate getting a good, steady job at the local plant might be dead, even if the plant is right down the street?

GuestIt's certainly much harder. We're seeing a real gap where companies can’t find enough people with the right skills to run these new machines. There's a huge chip plant being built in the desert right now that had to push back its start date because they couldn't find enough specialized workers to set up the tools. They actually had to fly in workers from overseas to get the work done. So we're in this weird spot where we have the buildings, but we don't have the people ready to walk through the doors. It creates this friction where the town is excited for the boost, but the local workers might feel left behind anyway because the bar for the job is so much higher than it used to be.

HostThat feels like we're just trading one problem for another. We get the factory, but we still have a workforce that doesn't fit the work. If the jobs are mostly for robots and the costs are higher, is there a point where we realize we overpaid for this sense of security?

GuestThat's the big question hanging over all of this. If we spend all this money and the prices of goods keep climbing, people might lose their taste for it. But the people in charge argue that you can't put a price on not being left in the dark when a global crisis hits. They would rather have an expensive factory they can reach by truck than a cheap one that's an ocean away when things go wrong. The real test will be ten years from now when the government checks stop and these plants have to stand on their own. We'll see if a factory full of robots and high-paid techs can actually compete with the rest of the world without a thumb on the scale.

HostThe real question is whether we're okay with a factory that runs with the lights off because there are no humans inside to need them.

GuestThose old labels on our shirts used to mean a whole town had a steady paycheck, but soon they might just mean the robots are doing a good job.