U.S. manufacturers plan to reshore operations, report suggests
54 per cent of executives from U.S.-based firms with sales greater than $1-billion plan to make move
CHICAGO—More than half of major American manufacturers are planning to bring production back to the United States from nations like China, a new survey suggests.
According to a report released by the Boston Consulting Group (BCG), 54 per cent of U.S.-based manufacturing executives from firms with sales greater than $1-billion are planning—or considering—reshoring their respective operations in the coming years.
That number compares to just 37 per cent who responded to a similar survey in February 2012.
“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,” BCG senior partner Harold L. Sirkin said in a the survey’s release.
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 per cent of respondents said they are “actively doing this” or that they “will move production to the U.S. in the next two years.”
That is more than double the number from the 2012 survey, according to BCG.
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- to 5 million American factory and related service jobs by 2020.
The top three factors cited as driving future decisions on production locations were: labor costs (cited by 43 per cent of respondents); proximity to customers (35 per cent); and product quality (34 per cent).
More than 80 per cent of respondents cited at least one of these reasons as a key factor.
Other leading factors include access to skilled labour, 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, who leads the BCG’s manufacturing work in the Americas.
“When you look at the total cost of production for many goods, the U.S. appears increasingly attractive.”
More than 200 decision makers at companies across a broad range of industries responded to the BCG survey.