Back in the USA – (blog)

by admin on August 9, 2012

CoreNet also surveyed its members on another forward-looking question in connection with the 2020 report: are we seeing the early stages of a trend toward on-shoring, i.e. the return of domestic manufacturing whence the places to which it was off-shored? Fifty-one percent agreed that we’ll be seeing more of this, due to companies either bringing jobs and plants back to the US or not sending them overseas in the first place.

“On-shoring in the U.S. will continue to gain steam due to changing global cost and supply chain dynamics,” says Dennis Donovan, principal with WDG Consulting, in a release accompanying the CoreNet survey. “The U.S. and its manufacturing base is more competitive than at anytime in a generation.” Donovan is a national expert on site location decision-making and a participant in CoreNet’s 2020 research.

Does this mean that the 2016 US team might go to the Olympics in uniforms that are actually made in this country? That remains to be seen. But there are positive signs. The US Bureau of Labor Statistics said that domestic manufacturing jobs have rebounded by 4.4.%, or more than 500,000, from the 10-year of 11,458,000 reported in January 2010.

A couple of examples illustrate this growth: the Coleman Co., maker of outdoor sporting goods ranging to sleeping bags to camping stoves, will move production of its 16-quart wheeled cooler back to Wichita, KS from China. Peerless Industries is bringing it all back home from China, consolidating the manufacture of audio-visual mounting systems in Illinois, where it’s based.

There are a few good reasons that Chris Horblit, president of Fidelity Real Estate Co., and other corporate real estate experts think this could emerge into a full-blown trend by 2020. All of them, by the way, are business-oriented—just as offshoring decisions have always been—and have nothing to do with the emotional appeal of patriotism or pride in American workmanship. For one thing, a fair number of the manufacturing processes in these new or revived plants won’t be staffed by American workmen at all, but instead will be automated. That’s one less reason to go for cheap overseas labor.

Another is that overseas workers don’t necessarily come as cheap anymore. Labor and transportation costs are rising in China and elsewhere. And there’s a key area in which the US has it all over China: protection of intellectual property. CoreNet points out that key executives at firms including GE, Microsoft, BASF and Siemens have criticized the Chinese government for not safeguarding foreign companies’ proprietary information, a lapse that has cost these companies billions.

All of this could represent a boon for industrial landlords—and developers, if US manufacturers find a need for more space than is available. Gains for the office sector could be marginal, however, depending on how much on-shoring of manufacturing means repatriating the positions of regional and central decision-makers that had been shipped overseas along with manufacturing. Having brought their operations back under one national roof, so to speak, companies may decide that they can make decisions just fine with the executives—and office space—they already have here.

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