85 percent of manufacturing executives see the possibility of certain manufacturing operations returning to the U.S., with 37 percent citing overseas costs as the major factor. Nineteen percent cited logistics and 36 percent stipulated other reasons, including economic/political issues, quality and safety concerns, patriotism and overseas skills shortages for highly technical manufacturing processes.
The survey, conducted by executive search firm Cook Associates, polled nearly 3,000 manufacturing executives primarily in small- to mid-sized U.S. companies in October and November 2011. Participants consisted of C-level executives (CEO, CFO, COO) and key functional Vice Presidents (Operations, Manufacturing, Supply Chain).The survey data was supplemented by written comments submitted by individual executives.
The survey identified low-volume, high-precision, high-mix operations, automated manufacturing and engineered products requiring technology improvements or innovation as the primary forms of manufacturing returning to the States.
The executives polled reported that wage inflation in traditional overseas venues, especially China, is changing the value proposition for American manufacturers. Cost was once the primary driver for moving manufacturing offshore, but now companies are “re-doing the math and thinking more about staying at home”. Also, because logistics are complex to begin with, the financial argument has to be compelling and “the dynamics are changing”.
In order to stay competitive in a slow economy, respondents report greater focus on quality and customer service as differentiators, both of which are better managed domestically. They also said that skill sets for certain manufacturing functions are not readily available overseas -- China specifically and Asia generally are unable to meet the demand for skilled workers. Finally, patriotism was cited as a factor as executives looked for a return to a ‘Made in America’ mentality in the U.S.
Source: Cook Associates
Graphic: Council on Competitiveness