Just when we were starting to feel good about a manufacturing surge in North America, along comes a study that deflates those positive claims. Darn that data.

A new report from the Information Technology and Innovation Foundation (ITIF), "The Myth of America's Manufacturing Renaissance," shows that data does not support a rosy scenario. The study finds that at the end of 2013 (the most recent year available) real manufacturing value-added (ITIF's measure of the health of US manufacturing) was still 3.2% below 2007 levels, despite a collective GDP increase of 5.6%.

The report finds there are still two million fewer jobs and 15,000 fewer manufacturing establishments than there were in 2007, before the recession. Much of the growth since 2010 appears to be caused by a cyclical recovery as demand returns, particularly for cars and other durable goods. In fact, 72% of jobs gained and 187% of the heralded real value-added growth in manufacturing between 2010 and 2013 came from either transportation or primary and fabricated metals.

We caught up with one of the report's authors, Adams Nager, economic research assistant at ITIF. We asked about some of the major ideas behind the belief that US manufacturing is booming and that reshoring has returned outsourced jobs back to North America. Nager pointed to data that he considers myth-busting. He specifically pointed to China labor costs, shipping costs, and US productivity as feel-good topics that may be false.

China's rising labor costs will soon match US wages

Nager insists this is myth. He notes that China's wages, while rising rapidly, are still estimated to be just 12% of average US wages in 2015. China's labor productivity growth and the government's infrastructure push to open China's interior for production reduce the impact of wage growth. "Wages in China are increasing fairly rapidly, especially in coastal provinces, but there are major trends that keep this from having a major impact. The first is that Chinese labor costs are still considerably lower than US labor," said Nager. "Second is the productivity difference. Our labor is not much more productive than China's labor. China is rapidly moving into more advanced industries. They used to compete just for the cheap stuff, but now they're expanding into more advanced industries."

Global shipping costs are unusually high, making reshoring attractive

Another myth, according to Nager. His study finds that undersupply led to skyrocketing global shipping costs in 2008. However, today shipping costs are back to normal after falling by 93% in a six-month period in 2009. "Global shipping costs are not a concern," he said. "When manufacturers do bring jobs back to the US, they're not citing cheaper production. They're saying they want production closer to their engineering team."

The goal of localized production is faster changes and faster turnabout time. "This is the only advantage I consider a trend on why scarce jobs are coming back," said Nager. The Reshoring Initiative estimates that 30,000 jobs are getting reshored annually. Nager notes that a similar number of jobs are going overseas at the same time. "We're not seeing the mass exodus of manufacturing like the late 1990s and early 2000s, but it remains a trend to send manufacturing to China," he said.

The shale gas and oil boom gives US manufacturing a substantial advantage

Nager claims this is also a myth. Reduced costs for shale energy has only impacted energy-intensive industries, and then only in a minor way, according to the study. For 90% of the manufacturing sector, energy costs are lower than 5% of shipment value. The benefits of cheap energy are largely restricted to the petrochemical sector and drilling operations. "Oil prices declining and the gas boom are not going to hurt manufacturing but they won't have a significant impact either," said Nager. "Plus, oil costs are declining worldwide, so it's hard to say it's giving us an advantage."

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Superior US productivity growth will restore jobs

Another myth, says Nager. He says his data shows US productivity is not increasing faster than that of other industrialized countries, and that it's growing much slower than productivity in China and South Korea. "We think we still have the edge, but that's not entirely true anymore," he said. "Japan, Korea, and even China are innovating. China is buying more robots than we are. We're improving productivity, but productivity is improving everywhere. To get manufacturing back we have to increase productivity faster than anyone else and that's not the case."

What about reshoring?

Nager also puts the kibosh on the belief that reshoring is bringing thousands of manufacturing jobs back to the US. "There are a lot of frictions in place that prevent manufacturing jobs from coming back from Asia," he said. For the manufacturers who moved production to China, the supply chain is now in China. Manufacturers have developed their industries there. Since they've been in Asia, they have innovated on their products and they would have to relearn how to make those products if production returned to the US. "Even if you could suddenly produce at the same cost in the US, you can't bring production back. It's not feasible. Most of what's gone to China will stay there," said Nager.

Nager believes that growth in US manufacturing will come from the creation of new products, not from the return of existing products. "If we're trying to lower our costs to bring manufacturing back from China, then we're living in the past and we're on the wrong side of history," he said. "We need to be innovating new products and new industries that are on the cutting edge. That's where the real advances in manufacturing jobs will come from."

Design engineers and professionals, the West Coast's most important design, innovation, and manufacturing event, Pacific Design & Manufacturing, is taking place in Anaheim, Feb. 10-12, 2015. A Design News event, Pacific Design & Manufacturing is your chance to meet qualified suppliers, get hands-on access to the latest technologies, be informed from a world-class conference program, and expand your network. (You might even meet a Design News editor.) Learn more about Pacific Design & Manufacturing here.

Rob Spiegel has covered automation and control for 15 years, 12 of them for Design News. Other topics he has covered include supply chain technology, alternative energy, and cyber security. For 10 years he was owner and publisher of the food magazine, Chile Pepper.