Did you know that onshoring has already begun? This is phenomena is no longer an idea, a theory, or a prediction; it’s happening right now. Some companies are bringing their manufacturing back to North America and you ought to know about it.
Onshoring is a game-changing development about which every contract manufacturer and board shop should know.
In IPC’s new report, “On-Shoring in the North American Electronics Industry: 2014 Update on Trends and the Impact on Companies,” you will learn just about everything you’ll need to know about the subject including:
- An update on the companies that have already moved onshore;
- Driving forces behind onshoring;
- Domestic sourcing trends; and
- Onshoring initiatives and outcomes.
Sharon Starr, IPC’s director of market research, has done an excellent job of collecting and analyzing data that will help you make future business decisions about onshoring.
From the report:
“Comments made by IPC’s survey participants indicate that a new way of thinking about geographic planning is taking hold. At many companies, siting of operations is no longer a tactical decision, but is now part of a larger regional strategy that takes into account everything that affects their bottom line and competitiveness. They look not only at direct costs, but also at things like the speed of product innovation, time to market, and insight into customer needs.”
And about domestic sourcing:
“Many OEMs in North America have opted to outsource domestically, especially where OEM designers need to work closely with the design and production staff at vendor companies, and where turn-around time can be critical.”
Think about that for a minute: one of the best reasons for domestic sourcing is the ease of developing products with vendors who are nearby. This is something that has always been critical and now more than ever. Considering that North America is still the world leader when it comes to NPI (new product introduction), innovation and marketing, this makes sense. You have to include marketing because marketing both pre and post product is what drives new product innovation and development.
Among some of the true driving forces behind onshoring, the report indicates the following (listed in order of importance as indicated by the companies surveyed):
- Cost of transportation;
- Quality control concerns;
- Management costs;
- To be close to customers;
- Quality of available labor;
- Intellectual property protection;
- Rising costs of manufacturing; and
- ITAR Requirements.
To be close to a customer seems to be an ongoing theme throughout the report and one that indicates what I feel is a direct arc from offshoring to onshoring that represents true globalization. As the world gets smaller, as the economies of the world finally equalize–and they will–the Chinese GM who was making $3.5k a year in 2002 is now making $22.5k a year today (how’s that for salary growth?). And, as anyone who buys circuit boards can attest, the pricing differential between domestic and offshore boards has diminished and is now often less than 20%.
Source Article from http://www.pcb007.com/pages/zone.cgi?a=102286
