A third of large US manufacturers mull return from China: Boston Consulting
20 Apr 2012
More than a third of US-based manufacturing executives at companies with sales greater than $1 billion are planning to bring back production to the United States from China or are actively considering it, reveals a new survey by The Boston Consulting Group (BCG).
Decision makers at 106 companies across a broad range of industries responded to the survey, which BCG conducted in late February. Thirty-seven per cent said they plan to reshore manufacturing operations or are ''actively considering'' it. That response rate rose to 48 per cent among executives at companies with $10 billion or more in revenues - a third of the sample.
The top factors cited as driving future decisions on production locations: labour costs (57 per cent), product quality (41 per cent), ease of doing business (29 per cent), and proximity to customers (28 per cent). In addition, 92 per cent said they believe that labour costs in China ''will continue to escalate,'' and 70 per cent agreed that ''sourcing in China is more costly than it looks on paper.''
The results are consistent with earlier BCG findings on the changing economics that are starting to favor the manufacturing of certain goods in the US.
In a report released last month, US Manufacturing Nears the Tipping Point: Which Industries, Why, and How Much?, BCG predicted that improved US competitiveness and rising costs in China will put the US in a strong position to add 2 million to 3 million jobs in a range of industries and an estimated $100 billion in annual output by the end of the decade.
''These survey findings confirm our own analysis and what we are hearing from major companies,'' said Harold L Sirkin, a BCG senior partner and coauthor of the firm's Made in America, Again series, which began last year.
