Outsourcing tide is not likely to turn As western economies trudge towards recovery this year, expectation abounds that economic activity lost to Asia might soon return home too. Such hopes will almost certainly prove shortlived. President Barack Obama has been the most prominent advocate for a new wave of "insourcing," using his second inauguration address on Monday to talk up plans that might "bring new jobs and businesses to our shores." During his re-election campaign Mr Obama often suggested the US was poised for an industrial and manufacturing renaissance - a theme set to resurface in next month's State of the Union address. Corporate titans have followed suit, with Jeffrey Immelt, chief executive of outsourcing pioneer General Electric, saying last year that he now viewed outsourcing as an outdated strategy. Other global companies, including Apple and Lenovo, have since announced plans to bring production facilities home from Asia, while reports last year suggested that GE would also take in house much of the software development it contracts to India. All of these threads came together most cogently in an essay in last month's Atlantic, which heralded an "insourcing boom," highlighting a rejuvenated GE factory in Kentucky churning out water heaters and washing machines once made in China and Mexico. Enthusiasts for reshoring typically begin their case by noting China's rising wage costs and declining labour force. Others focus on energy costs, honing in on America's shale gas boom as a potential source of competitive advantage for its manufacturers. A third argument is that companies now see outsourced relationships as convoluted and insecure, especially after the type of supply-chain disruption that followed last year's Japanese tsunami. Insourcing's more careful advocates point just to the beginnings of a trend away from Asian manufacturing. Even so, most evidence fails to back up even these more modest assertions. China's labour costs are rising, but they remain far below those in western economies, with hourly manufacturing pay roughly 25 times lower than in the US, according to the latest figures from the US Bureau of Labor Statistics. If China becomes too expensive there are plenty of other Asian countries to which to turn, not least India, whose huge labour force is cheaper still, and whose government will eventually get its act together to support a viable mass-manufacturing economy. It is true that some companies that send production overseas later bring it back. But what matters is the flow of activity overall, and here there is little to suggest that the move to Asia has slowed. Quite the opposite, in fact: a study this month from the US Business and Industry Council, a trade body, showed record manufacturing imports into the US in 2011, suggesting more reliance on overseas production, not less. Sectors in advanced economies that have so far been immune from competition may also become vulnerable, as the capabilities of emerging Asian nations improve. Take garments. Here some western jobs have been relatively protected because they are highly skilled, and because of the need for quick deliveries to domestic consumers. But perhaps not for long. At the end of last year I visited Sri Lanka, an exporter of everything from underwear to football shirts for retailers such as Zara of Spain and Britain's Marks and Spencer. Fashion businesses typically operate by shipping basic clothes from the likes of Vietnam and Bangladesh, before completing more complicated tasks - such as packaging, labelling or marketing - in Europe or the US. Here Sri Lanka sees an opportunity: to establish a garment hub on the corner of the island just off the coast from the world's busiest east-to-west shipping lane. New manufacturing, warehousing and logistics facilities could in time allow the island to offer capabilities comparable with competitors in the industrialised world. It is a small example, but a telling one - demonstrating how companies in Asia continue to find ways to insert themselves into supply chains, mostly with the effect of grabbing a greater slice of the global production pie. It seems like bad news for the west, but it need not be. Leaders such as Mr Obama can concentrate on activities that are not yet outsourceable, support workers to improve their skills, or husband new industries where no other country is yet a threat. But hoping that production long since sent abroad will be repatriated any time soon? Not likely. James Crabtree is the FT's Mumbai correspondent