Manufacturers return to US
October 23, 2014
More manufacturers are relocating back to the United States from China as wage costs in the populous Asian nation rise, a #link:https://www.bcg.com/media/PressReleaseDetails.aspx?id=tcm:12-174453:new survey from The Boston Consulting Group# has revealed.
The study, released Thursday but conducted in August, surveyed executives at companies with annual sales of at least $1 billion (790 million euros) and manufacturing operations in China. It found the number of firms that are already in the process of repatriating production had risen 20 percent compared to one year ago.
Sixteen percent of managers who participated in the "Made in America, again" survey answered, "Yes, we are already actively doing this," compared to 13 percent in 2013. Half of respondents said they expected to grow their American workforces by 5 percent or more within five years.
It was the consultants' third such annual survey, drawing responses from 252 managers across a range of industries.
The number of executives who said their company would consider moving production back to the US from China was up by about 24 percent. More than half of those surveyed said they were at least interested in relocating.
"These findings show that not only does interest in repatriating production to the US and creating American jobs remain strong but also that companies are acting on those intentions," said Harold L. Sirkin, a senior partner with the Boston Consulting Group and one of the study's co-authors.
But companies' reasons for moving production went beyond direct costs such as labor. Eighty percent of participants cited shorter supply chains and reduced transportation costs as good reasons to move. More than 70 percent listed better access to skilled labor.
Last year, respondents said they expected around 40 percent of companies' total production to be located in the US within the next five years. This time around, however, that number rose to 47 percent.
But China was not the only place that may witness a flurry of American manufacturers return home. The Boston Consulting Group also foresaw declines of 5 percent in Mexico, 19 percent in Western Europe and 22 percent in the rest of Asia.