In the second article of this five-part series on the accelerating trend of onshoring manufacturing due to COVID-19, we discussed the relative attractiveness of Mexico as a destination for firms looking to reduce their reliance on Chinese manufacturing. Now, we will explore interplay between the skillsets that will be needed to enable complex manufacturing here in the U.S., the dynamics that have driven jobless recoveries in prior recessions and how investments in automation are enhancing America’s competitiveness, as well as supply chain resiliency.

Onshoring: The New Age of American Manufacturing

As outlined previously, there are a myriad of attractive qualities to Mexico for firms that are considering building additional capacity to reduce reliance on China. One challenge we are seeing in assisting clients in the location selection process is that frequently, their most critical components are those that require the most advanced manufacturing processes. In many cases the talent required to perform those processes, specifically in complex areas like electronics or micro-chips, are scarcely available in Mexico. Thus, creating an inherent need for advanced manufacturing jobs within the U.S.

These manufacturing jobs require a different skillset than those of the past. This new-age manufacturing employee is what has been dubbed by some as “New Collar Workers”, a hybrid between blue-collar workers and engineers. This cohort of the labor pool has additional mathematical training in courses like geometry and trigonometry, certifications or associate degrees in areas like industrial automation technology (IAT) and are trained to program and operate highly autonomous, complex manufacturing equipment.

This is the talent pool Taiwan Semiconductor was seeking when they announced in mid-May that they would open a new manufacturing facility in Arizona. Piggybacking off the talent pool that firms like Raytheon and Intel have developed in partnership with members of the Arizona Advanced Technology Network, a collaboration of Community Colleges in the Phoenix and Tucson area, creating a depth of students with training in IAT. Toyota also has a number of these partnerships with local community and technical colleges dating back to 2010, when it launched the first iteration of its Advanced Manufacturing Technician (AMT) program to support its U.S. manufacturing plants and “equip students with the knowledge and skills to compete in the workforce.”

We anticipate more of these types of relationships taking place as educators and employers continue to explore ways to bridge the gap between supply and demand for these specialized skill sets.

Another Jobless Recovery Awaits

This reskilling will be needed as unemployment spiked to nearly 15% in April, up from 4.4% in March. Though unemployment was down to 7.9% in September, it remains well above the historical average of 5.8%1 and a significant portion of the decline has come from a reduction in the labor force participation rate. Data from the last three recessions (1991, 2001 and 2008) show occupations that perform “routine tasks” are those that get eliminated during downturns and do not return during the subsequent recoveries. Many traditional manufacturing jobs fit into this description.

The driver behind these disappearing jobs is the age-old economic framework that positions labor and capital as substitutes. During recessions, the Fed typically lowers interest rates. Simultaneously the burden on the system increases as more funds are needed to support the unemployed, resulting in higher payroll taxes. This dynamic of lower capital costs and rising labor costs paired with the continuous acceleration in technological advancement tilts the scale in favor of capital investment in automation as a replacement for unskilled labor.

The Automation is Coming

As the 10-year U.S. Treasury note sits near historic lows, this investment has begun to take shape in the form of capital deployment toward manufacturing technology and automation. Cheap capital, along with the immediate depreciation benefits to capital expenditures brought about by the Tax Cut and Jobs Act of 2017, creates an attractive investment environment for organizations. These factors paired with the widely publicized weaknesses that COVID-19 has exposed within global supply chains, will likely be drivers of onshoring complex manufacturing processes. As firms prepare to shift out of capital preservation mode post-COVID-19, digital “muscle building” will be a critical leverage point for increasing supply-chain resiliency.

Clients are more frequently inquiring about potential investments in automation, such as robotics and additive manufacturing, in an effort to increase production volume and consistency, reduce costs, and decrease their vulnerability to workforce availability and health related risks. Additionally, insights generated from the application of advanced analytics, artificial intelligence, and cloud computing to IOT platforms increase operational visibility. This transparency enables companies to manage risk and respond to market-based threats or opportunities more effectively. As the director of real estate for a global life-sciences organization recently stated, “in times of increased uncertainty, the importance of data to inform decisions is paramount.”

In our next report we will discuss the areas of the U.S. most likely to benefit from onshoring and drivers behind their attractiveness.

1 Historical average refers to national unemployment from 1948 to 2020.

About the Authors:

This article was written by the Colliers’ Workforce Analytics team, within Occupier Services, whose mission is to enable people strategy to advise and transform businesses. This consulting service offering leverages agile technology and advanced analytics to equip businesses with workforce-related insights to make fact-based, quantitatively justified location-related decision in labor markets around the world.


As Vice President of Workforce Analytics, Bret Swango, leads the day-to-day, consulting operations of this service offering. An industry expert in labor and related data analytics, he provides clients with insights on markets around the world to help them navigate and understand the implications of workforce data and enable occupiers to make informed business decisions. Prior to this role, Bret served as a director on the Corporate Solutions team in Chicago working with clients to develop business intelligence platforms and analytical tools to align their real estate strategy with their operational objectives.


Head of Location Strategy Consulting, Gregory Healy, a senior vice president, leads the Supply Chain Solutions team in the U.S. for Occupier Services, as well as Workforce (Labor) Analytics Consulting practice. With over 20 years of global manufacturing and supply chain experience as both a senior executive in the corporate world, as well as owning a supply chain consulting practice and a third-party logistics business, Gregory has real world experience that brings a unique perspective to the Colliers team.