More than a third of U.S.-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).
Decision makers at 106 companies across a broad range of industries
responded to the survey, which BCG conducted in late February.
Thirty-seven percent said they plan to reshore manufacturing
operations or are “actively considering” it. That response rate rose
to 48 percent 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 percent), product quality (41 percent),
ease of doing business (29 percent), and proximity to customers (28
percent). In addition, 92 percent said they believe that labor costs
in China “will continue to escalate,” and 70 percent 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 U.S. In a report released last month, U.S. Manufacturing
Nears the Tipping Point: Which Industries, Why, and How Much?, BCG
predicted that improved U.S. 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.
“These survey findings confirm our own analysis and what we are
hearing from major companies,” said Harold L. Sirkin, a BCG senior
partner and coauthor of the firm’s “Made in America, Again” series,
which began last year. “Companies are realizing that the economics of
manufacturing are swinging in favor of the U.S., for goods to be sold
both at home and to major export markets. This trend is likely to
accelerate starting around 2015.”
Interest in shifting manufacturing to the U.S. is particularly strong
among companies in several sectors identified in BCG’s March report
as nearing a “tipping point.” In these industry groups, China’s cost
advantage is likely to shrink within the next few years to the point
where companies should rethink where they produce certain goods,
mainly those for sale in North America. These tipping-point sectors
are 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 percent of U.S. imports from China in these industries,
which account for approximately 70 percent of goods that the U.S.
imports from that nation, could shift to the U.S. before the end of
the decade.
In the new survey, 67 percent of respondents in rubber and plastic
products, 42 percent in machinery, 41 percent in electronics, 40
percent in computers, and 35 percent in fabricated metal products
said they expect that their companies will reshore production from
China to the U.S.
“Not long ago, many companies regarded China as the low-cost default
option for manufacturing,” observed Michael Zinser, a BCG partner who
leads the firm’s manufacturing work in the Americas. “This survey
shows that companies are coming to the conclusion surprisingly fast
that the U.S. is becoming more competitive when the total costs of
manufacturing are accounted for.”
To request a summary of the survey findings or to arrange an
interview with a BCG expert, please contact David Fondiller at +1 212
446 3257 or fondiller.david@bcg.com.
About The Boston Consulting Group
The Boston Consulting Group (BCG)
is a global management consulting firm and the world’s leading
advisor on business strategy. We partner with clients from the
private, public, and not-for-profit sectors in all regions to
identify their highest-value opportunities, address their most
critical challenges, and transform their enterprises. Our customized
approach combines deep insight into the dynamics of companies and
markets with close collaboration at all levels of the client
organization. This ensures that our clients achieve sustainable
competitive advantage, build more capable organizations, and secure
lasting results. Founded in 1963, BCG is a private company with 75
offices in 42 countries. For more information, please visit
www.bcg.com .
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SOURCE: The Boston Consulting Group
Copyright 2012 Marketwire, Inc., All rights reserved.
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