Click here to find suppliersCHICAGO—Manufacturers will add more production capacity in the U.S. for goods consumed in the U.S. than in any other country over the next five years—a sharp reversal from two years ago. A rising percentage of U.S.-based manufacturer executives said they are already in the process of reshoring production work from China. These are among the findings in the fourth annual survey of senior U.S.-based manufacturing executives by The Boston Consulting Group (BCG).
Survey: U.S. Is Now the Preferred Location for New Factory Capacity to Serve U.S. Market
Thirty-one percent of respondents to BCG’s fourth survey at companies with at least $1 billion in annual revenues said that their companies are most likely to add production capacity in the U.S. within five years for goods sold in the U.S., while 20 percent said they are most likely to add capacity in China. Asked the same question in 2013, 30 percent of respondents said that China was the most likely destination for new capacity devoted to serving the U.S. market, while only 26 percent said capacity would be added in the U.S.
Even though China will remain a major exporter to the U.S., accounting for around 18 percent of its total exports through the first eleven months of 2015, the suggestion that the U.S. has surpassed China as the most likely destination for new manufacturing capacity is striking.
The share of executives saying that their companies are actively reshoring production increased by 9 percent since 2014 and by about 250 percent since 2012. This suggests that companies that were considering reshoring in the past three years are now reshoring. By a two-to-one margin, executives said they believe that reshoring will help create U.S. jobs at their companies rather than lead to a net loss of jobs.
“These findings underscore how significantly U.S. attitudes toward manufacturing in America seem to have swung in just a few years,” said Harold L. Sirkin, a BCG senior partner and a co-author of the research. BCG launched its surveys of shifting economics of global manufacturing in 2011. “The results offer the latest evidence that a revival of American manufacturing is underway.”
This year’s survey also confirmed that factors such as logistics, inventory costs, ease of doing business, and the risks of operating extended supply chains are weighing heavily in executives’ decisions to bring manufacturing back to the U.S. Seventy-six percent of respondents reported that a primary reason for reshoring production of goods to be sold in the U.S. was to “shorten our supply chain,” while 70 percent cited reduced shipping costs and 64 percent said “to be closer to customers.”
“The fundamental economic forces that are prompting many companies to reassess their global manufacturing footprint have not changed,” explained Michael Zinser, a BCG senior partner and co-leader of the firm’s global Manufacturing practice. “Given the big differences in wage growth and productivity—and the greater attention companies are paying to total cost—there is good reason to believe that the cost-competitiveness of the U.S. compared with China and many other major export economies will continue to improve in the near term.”
The decreasing costs and improved capabilities of advanced manufacturing technologies, such as robotics, also make manufacturing in the U.S. more attractive than in economies whose chief advantage is cheap labor. Fifty-six percent of respondents said that lower automation costs have improved the competitiveness of U.S.-made products compared with similar goods sourced from low-cost countries. Seventy-one percent said advanced manufacturing technologies will improve the economics of local production, and 75 percent said they will invest in additional automation or advanced manufacturing technologies in the next five years.
Even though they plan to invest more in automation, manufacturing executives indicated that reshoring is still likely to create new U.S. manufacturing jobs. Fifty percent of respondents said they expect that U.S. manufacturing employment by their companies will increase by at least five percent over the next five years as a result of reshoring; 27 percent predicted a job increase of at least 10 percent.
|Home | About Us | Back To Technical Library | Contact Us|
Copyright © 1996-2010 JobShop.com. All Rights Reserved.
General or Technical Questions? E-mail support@JobShop.com