Skip to comments.Majority of Large Manufacturers Are Now Planning or Considering ĹReshoringĺ from China to the U.S.
Posted on 05/21/2014 10:49:57 AM PDT by ckilmer
CHICAGO, September 24, 2013—More than half of U.S.-based manufacturing executives at companies with sales greater than $1 billion are planning to bring back production to the U.S. from China or are actively considering it, according to a new survey by The Boston Consulting Group.
The share of executives who are planning to “reshore” or are considering it rose to 54 percent, compared with 37 percent of executives who responded to a similar BCG survey in February 2012. The new survey, conducted last month, elicited responses from more than 200 decision makers at companies across a broad range of industries. Virtually all of the companies manufacture in the U.S. and overseas and make products for both U.S. and non-U.S. consumption.
The survey also found a sharp increase in the percentage of executives who are actively engaged in the process of shifting production to the U.S. When asked whether they expect to move production in light of rising wages in China, 21 percent of respondents—around twice as many as in 2012—said they are “actively doing this” or that they “will move production to the U.S. in the next two years.”
The increase in willingness to reshore supports earlier BCG findings that are part of the firm’s Made in America, Again series, produced by its Operations and Global Advantage practices. The series explores the shifting economics of global manufacturing and how the changes are starting to favor the production of certain goods in the U.S.
In a report released in August, Behind the American Export Surge: The U.S. as One of the Developed World’s Lowest-Cost Manufacturers, BCG projected that production reshored from China and higher exports due to improved U.S. competitiveness in manufacturing could create 2.5 million to 5 million American factory and related service jobs by 2020.
“Over the past couple of years, we’ve projected an improvement in U.S. manufacturing competitiveness by 2015 that would help drive an American manufacturing revival,” said Harold L. Sirkin, a BCG senior partner and a coauthor of the study. “The results of our latest survey make clear that a profound shift in attitude is beginning.”
The top three factors cited as driving future decisions on production locations were labor costs (cited by 43 percent of respondents), proximity to customers (35 percent), and product quality (34 percent). More than 80 percent of respondents cited at least one of these reasons as a key factor. Other leading factors include access to skilled labor, transportation costs, supply-chain lead time, and ease of doing business.
“The wide range of reasons executives cite for shifting production shows that companies are becoming more sophisticated in their understanding of all the factors that must be considered when deciding where to manufacture,” said Michael Zinser, a BCG partner who leads the firm’s manufacturing work in the Americas. “When you look at the total cost of production for many goods, the U.S. appears increasingly attractive.”
“These findings confirm that the reshoring trend is more than anecdotal,” said Justin Rose, a BCG partner who along with Sirkin and Zinser is a coauthor of The US Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback (Knowledge@Wharton, 2012). “As the costs and benefits become more apparent, we expect more companies to consider manufacturing in the U.S. if their products are to be consumed in the U.S.”
Energy costs will also play a role.
Translation: Fracking has made energy cheaper and the Chinese workers are getting uppity, whereas the Obama depression has put US workers right where we want them.
0bama has destroyed wages and the middle class, created a huge mass of unemployed, so we are now cost competitive.
More union jobs? oh goody?
Let me know when it happens.
Ha, ha. That was my first thought.
Energy costs (particularly nat gas) are playing a huge role in reshoring.
No a poll that says pretty much the same thing as last years poll does not confirm anything.
Significant actual reshoring would confirm it.
Glad to see Mexico is a rising star also. Might take some pressure off of the border.
Well, we have reasonably cheap energy for now. But Obama’s on it.
We didn’t reshore from China, but we did from Indonesia. Even with competent and efficient Singaporeans running the factory, there were just too many Muslim holidays in Indonesia for us to keep track. By the time we got our orders, the needs had completely changed.
Not much chance. At least not with the current assault on American business, investment, and jobs . Perhaps other countries with low labor costs , yes. Or somewhat more if USA ever returns to a pro- economic growth, pro- jobs national policy. Or even just neutral
How about jobs for the new cheap labor pool to be created by amnesty.
This story is entirely correct, with an ever so small misleading concept.
Machining has already made a return to America. And you should see one of these new centers. Hundreds and hundreds of machines. Where are the people? Oh there’s a few low to moderately paid folks driving around on carts that deliver raw materials to and pick up finished products from the machine. And a very few well paid people in a glass walled office programming the machines.
Automation and computerization have allowed the creation of machines that are better than people, even if the people worked for nothing (wastage and mistakes make the difference).
And if you are going to have millions (or billions) of dollars sunk in the ground, why do it in some foreign country where they might decided to nationalize things?
Yes, these industries ARE coming back. But the number of jobs that will come back with them will be a pittance compared to what left. And since the liberals have decided to turn schools into propaganda factories that produce nothing but dullards, the good jobs of programming the machines will all go to Indians.
But we will be racially, culturally, and sexual orientation sensitive.
But do it after the general election. (When a Republican is in control of the White House.)
According to Harry Moser, founder/president of the Reshoring Initiative, we have already stopped the economic bleeding caused by offshoring.
Since 2003, new offshoring is DOWN by 70% to 80% and new reshoring is UP by 1500%.
The most important accomplishment has been the net-loss of 100,000+ manufacturing jobs each year has ended.
New reshoring is now balancing new offshoring at about 40,000 manufacturing jobs/year, resulting in the first neutral year of job loss/gain in the last 20.
Reshoring is happening because overseas locations are becoming less attractive and reshoring is gaining momentum because it is helping U.S. manufacturers recover from offshorings poor quality, trade secret thefts, supply chain disruptions and lengthly delivery times all while staying cost competitive.
I am suspicious of the analysis and do not have time to research it right now. Maybe you can answer some questions about the analysis for me.
Do the analysis include regulatory and taxation in their cost of manufacturing?
What is included in their manufacturing, export and GDP #s?
The deflation of the dollar and the shrinking wages along with a seemingly oversupply of labor certainly lends some plausibility to the analysis. BUT, the cost of doing business in the US is in the top 5 in the world when you include taxation, regulatory adherence, licensing, permitting, legal fees, etc. I suspect they may have left that out but maybe you have some insight on it.
Do these traitors really believe that the communists are going to allow it?
This is actually horrible news for Obama. He hates the US, he hates fracking, he hates fossil fuel, he hates capitalism, he hates trained hard-working independent people, and he hates American prosperity. Best news I’ve herd in many months.
Also, they may be worried about the safety of their investments (and executive’s lives) should things get ugly between the US and China. There’s also the consideration of China stealing intellectual property, and opening up their own production facilities selling comparable (or counterfeit) products.
They have the inside track on the Crat traitor amnesty plans?
Either this is a satire site, or it is complete BS. With the coming cost of Obamacare, the rising cost of EPA regulatory complaince and the increasing cost of energy, it would be a death knell to re-shore to the US right now.
Not in our case. This is a fairly low-tech product manufactured with a fairly low-tech machine. No robotics involved.
Hey, we are in agreement on a thread! I better acknowledge it when such a thing happens.
One thing that is helping “reshoring” is the many billions of dollars America’s railroads have spent on rolling stock and increased track capacity. That means very efficient movement of goods, lowering production costs.
For example, a doublestack container train can move 250 doublestack containers with only five locomotives (two in the lead, one in the middle and one in the rear operated in remote distributed power fashion). That’s extremely fuel-efficient, since the fuel consumed by five locomotives is a tiny fraction of 250 tractor-trailer rigs pulling each container.
The worker bees? Not so much.
Dude, that brought a tear to my eye! lol Lovely.
Anybody want to bet most of those jobs won’t be going to blue high tax states like California, NY, NJ, Illinois, Massachusetts, Maryland, etc.?
It will be a financial boon initially, however in the long run the fines will increase to a point that it will cause more and more off shoring.....
Obama is bringing home jobs!!!
I’m afraid you’re right. But as a Japanese CEO told me: ‘American business owners think about the next quarter’s financial performance. We think about the next generation’s.’
Energy will play a role, but most people don’t realize the expense of setting up in China. 2nd-hand, I was told that you basically are REQUIRED to have a domestic Chinese ‘partner’, unlike here in the States where anyone can come over and set up shop according to US & that State’s laws. The irony of such businesses as GM et al that set up over there for the Chinese market is that they still make $$ vs. the alternative of exporting US-made products to China.
However, that stated, I call BS.
I’ll believe it when it begins and starts steamrolling (it hasn’t yet that I’ve seen reported at all).
That was my thought. And the massive unemployment created by the Clown will guarantee cheap workers.
Although the regulation nation we have become will depress some growth. And “manufacturing” of the 1980s is not like the manufacturing of the 2010s, is it? You probably don’t NEED as many people in a given field....
This is actually horrible news for Obama. He hates the US, he hates fracking, he hates fossil fuel, he hates capitalism, he hates trained hard-working independent people, and he hates American prosperity.
but don’t doubt that he will take credit for the prosperity.
From my experience buying a number of Chinese manufactured products, many Chinese “businesses” are fraud perpetrators masquerading as legitimate businesses. Jut start with dog poison fobbed off as “dog food.” Then there are a lot of smaller outfits that deliberately manufacture shoddy products to rip off consumers. I was burned by a defective electrical sprayer that never sprayed due to bad internal seals. I’ve just returned a beautifully designed floor lamp to Lowe’s because of horrible manufacturing that included holes drilled too large for the screws and an undersized washer that made secure attachment of the arm to the base impossible. A manufacturer’s contracting with the Chinese is like playing Russian Roulette.
Thought the same thing. Lol.
The news you’ve been waiting for, CNN ;)
The low information voters will buy it—but fewer and fewer of the rest of the US.
The EIA’s last report was that US oil production was at 8.4 million barrels@ day. Compare that to the graph. You’ll see how fast production is rising.