Manufacturing Moving from China to US: Survey – Large manufacturers are increasingly moving production back to the United States from China, according to a new report by The Boston Consulting Group released last week. In the third annual survey of US-based senior executives at manufacturing companies with annual sales of at least $1 billion, the number of respondents who said their companies were currently reshoring to the US from China increased 20% from a year ago. “Given the fact that China’s wage costs are expected to grow, do you expect your company will move manufacturing to the United States?” the August survey asked executives at an unspecified number of companies that currently manufacture in China. The executives who said “Yes, we are already actively doing this” rose to roughly 16% in the “Made in America, Again” survey in August from 13% a year earlier and 7% in the first survey in the series, in February 2012. After watching the US bleed jobs for years as manufacturers’ offshore production to China, “now we’re watching a switchback,” Harold Sirkin, a co-author of the BCG research, told AFP.
The Boston-based global management consulting firm said the online survey was conducted across a wide range of industries, from electronic and computer equipment to transportation machinery, petroleum refining, apparel, and food products. Almost all of the decision makers work for companies that manufacture in the US and overseas and make products for both US and non-US consumption, BCG said, without identifying the companies. The overall survey drew 252 responses. The number of executives who said their companies would “consider” moving production back to the US from overseas in the near future climbed by about 24%. Increasing labor costs in China’s factories are helping to push some American companies to consider moving back to the US.
More than half – 54% -- of the respondents said they were interested in reshoring production to the US, roughly the same percentage as a year ago. More than 70% cited better access to skilled labor as a reason to move production to the US, more than four times as many who cited it for moving production away from the US. For goods that would be sold in the US, nearly 80% gave shorter supply chains and reduced shipping costs as a motive for reshoring. In addition, 71% said it was easier to do business in the world’s largest economy and about 75% said the move provided local control over manufacturing processes and improved quality and yield.
China’s waning share predicted –
Looking at plans; 47% of total production would be back in the US, a 7% increase from last year’s responses. Cutbacks in China were projected to be sharp, down to 11% of total production capacity, a decrease of 21% from the 2013 survey. Declines were also predicted for Mexico (-5%), Western Europe (-19%) and the rest of Asia (-22%), whereas a 23% increase was seen for the rest of the world. The survey also found the United States has topped neighboring Mexico as the most likely destination for new capacity to serve the US market. Tied roughly even last year, at 26% each, this year 27% of executives cited the US, while 24% favored Mexico. A strong majority of respondents – 72% -- plan to invest in additional automation or advanced manufacturing technologies in the next five years, saying that would allow them to cut costs, boost competitiveness and allow them to benefit from being closer to suppliers and customers. “The US is strongly positioned to benefit from manufacturers that seek to increase regionalization, especially as automation costs decline,” BCG said. The future looked brighter for employment, too. Fifty percent of the executives expected US manufacturing job growth of at least 5% in the next five years, compared with 17% who anticipated net job losses.