During the Great Recession many U.S. companies pursued outsourcing arrangements overseas to take advantage of lower labor costs and reduced taxes.
Now the economic climate has changed, and many companies are “reshoring” by bringing outsourced jobs back. And Utah stands to benefit from this new trend, especially in its growing outdoor industry segment.
Leading the way in reshoring outdoor-related manufacturing jobs is Utah-based Black Diamond Inc., manufacturer of equipment and clothing for climbing, skiing and mountain sports. The company recently announced it will expand its operations in Utah, adding up to 160 jobs and making an expected capital investment of $7.7 million.
According to the Governor’s Office of Economic Development, the jobs will be created over a seven-year period and are expected to exceed 125 percent of the Salt Lake County average wage. The office said this means the overall economic impact could be well over $48 million in the long run.
“We are more than happy to support companies that are working to bring more jobs home,” said Val Hale, executive director of GOED in a press release. “We are especially excited that Black Diamond has selected Utah for their reshoring and native expansion. The outdoor recreation cluster is near and dear to our hearts in this state, and we are grateful for the contribution Black Diamond makes.”
That’s good news. We hope other companies that have a Utah presence will follow suit.
“With Utah’s brand-defining outdoor landscapes, Utah is clearly the best place to consolidate our global manufacturing operations and invest in bringing new jobs to the state as we reshore operations,” said Peter Metcalf, Black Diamond CEO and founder.
According to TechTarget, the recent movement toward reshoring stems from operational challenges that have caused a decline in overseas productivity and quality. Wages are starting to go up overseas, especially in China, making offshore operations more expensive. In the U.S., improvements in domestic energy production, government incentives and the trend towards locating production closer to consumers is also causing companies to abandon their overseas operations and bring jobs back.
Now, we aren’t about to pin a patriotic medal on Black Diamond for returning jobs to Utah and the U.S. We feel those jobs never should have been shipped overseas in the first place. But it is a good sign, even if it the decision is just “good business.”