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.”
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.
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but don’t doubt that he will take credit for the prosperity.
bfl
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.
http://www.freerepublic.com/focus/f-news/3158750/posts
Thanks.
Desperate Americans have been grasping at these BS stries for years now; simple logistics indicate that most of our lost jobs are gone forever. Why build things here if the buyers are in Asia anyway? Southern Asia still has much cheaper labor than the US or Red China; jobs leaving Red China are going there instead.
How long before Americans accept that much of the decline in our standard of living is permanent?
So far, a no-show on this thread too.
Desperate Americans have been grasping at these BS stries for years now;
...............
Its probably a good idea to look at the stats. Unless you’re invested in gold. Then none of this matters. All that matters is the house of pain.
Bring back America jobs.
:D
Boo-yah.
Our enemies, both inside and out of the US, never anticipated this. We have an opportunity to save this country and start making things again creating good solid jobs for everyone. But we have to get the federal government back under control: balanced budget amendment, re[eal opf the 17th, and term limits at every level.
Article V.
Convention of States
conventionofstates.com
As others have noted in this thread, it is manufacturing, not necessarily jobs, that may be coming back. Automation is cheaper than employees. We would produce more, just not add/return jobs much.
Also, ObamaCare will likely not apply to employers anymore. In DEC (just after the elections), ObamaCare is set up to have the majority of large employers drop health coverage (forcing tens of millions into Obama's insurance pool).
Finally, energy costs are holding steady here, thanks to natural gas fracking, and more oil production from Texas and North Dakota.
Saudi America :-)
I did see the later points regarding the automation and I think that is a valid counter point. However,it is not enough to overcome the issues related to manufacturing.
“ObamaCare will likely not apply to employers anymore. In DEC (just after the elections), ObamaCare is set up to have the majority of large employers drop health coverage (forcing tens of millions into Obama’s insurance pool).”
True, but that will come with a fine and those fines will skyrocket very quickly. Most manufacturers understand that and it will result in more manufacturing leaving the country.
“Finally, energy costs are holding steady here, thanks to natural gas fracking, and more oil production from Texas and North Dakota.”
Sure, fracking is a huge boon to the overall US energy situation and that is good for heat treatment or glass producion. However, the shutdown of coal produced electricity is causing large energy increases on plastics molding, drilling, general robotics and other automation.
I am currenlty planning for the production of a very large product, with many parts. It is scheduled to be launched in 2018 and will be produced in each of the main production regions in the world. Believe me, I am not seeing any “equalizing” of China to the US. It is equalized with Mexico tho....
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