Large manufacturers considering move back to US: survey – SmartPlanet.com (blog)

by admin on April 22, 2012

More than a third of US-based manufacturing executives at companies with sales greater than $1 billion are planning to bring back production to the United States from China or are considering it, according to a new survey by The Boston Consulting Group (BCG).

The trend toward pulling back manufacturing from China and bringing it back to the United States appears to be accelerating. BCG’s recent survey of decision makers at 106 companies across a broad range of industries found that 37% said they plan to reshore manufacturing operations or are “actively considering” it. That response rate rose to 48% among executives at companies with $10 billion or more in revenues—a third of the sample.

The top factors cited as driving future decisions on production locations: labor costs (57%), product quality (41%), ease of doing business (29%), and proximity to customers (28%). In addition, 92% said they believe that labor costs in China “will continue to escalate,” and 70% agreed that “sourcing in China is more costly than it looks on paper.”

The results are consistent with earlier BCG findings on the changing economics that are starting to favor the manufacturing of certain goods in the US. BCG predicts that improved US competitiveness and rising costs in China will put the U.S. in a strong position to add 2 million to 3 million jobs in a range of industries and an estimated $100 billion in annual output by the end of the decade.

Not mentioned in the BCG release, but an important factor, is the rise of automation and digitization of production processes within US companies, thanks to information technology and lean methodologies.

Sectors likley to lead the way in reshoring back to US-based production include transportation goods, appliances and electrical equipment, furniture, plastic and rubber products, machinery, fabricated metal products, and computers and electronics. BCG predicts that production of 10% to 30% of U.S. imports from China in these industries, which account for approximately 70% of goods that the U.S. imports from that nation, could shift to the US before the end of the decade.

In the new survey, 67% of respondents in rubber and plastic products, 42% in machinery, 41% in electronics, 40% in computers, and 35% in fabricated metal products said they expect that their companies will reshore production from China to the United States.

(Photo: Wikimedia.)

Source Article from http://www.smartplanet.com/blog/business-brains/large-manufacturers-considering-move-back-to-us-survey/23644

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