New data from the Boston Consulting Group (BCG) (
www.bcglondon.com) suggests that US manufacturers are increasingly likely to add capacity ‘at home’ rather than look to out-source production.
Of companies expecting to increase their production capacity in the next five years for goods consumed in the US market, 20% said they plan to add capacity in China, whereas 31% said they will do so in the USA.
Two years ago, 30% said they would add capacity in China, and 26% said they would do so in the USA. BCG researchers called the reversal “striking”.
Harold Sirkin, a BCG senior partner and a co-author of the research, said: “Manufacturing executives report that the increase in re-shoring is already happening. Some 17% of respondents reported actively re-shoring production today, which is an increase of 250% compared with two years ago.
“These findings underscore how significantly US attitudes toward manufacturing in America seem to have swung in just a short time. They offer the latest evidence that a revival of American manufacturing is underway.”
Michael Zinser, a BCG senior partner and co-leader of the firm’s global manufacturing practice, said: “The fundamental economic forces that are prompting many companies to re-assess their global manufacturing footprint have not changed.
“Given the big differences in wage growth and productivity — plus the greater attention companies are paying to total cost — there is good reason to believe that the cost-competitiveness of the USA, compared with China and many other major export economies, will continue to improve in the near term.”
Mr Zinser said that advanced manufacturing technologies such as robotics are helping to make the USA more attractive for investment. A total of 56% of respondents said that lower automation costs have improved the competitiveness of US-made products.
Moreover, 71% said that advanced manufacturing technologies will improve the economics of local production, while 75% said they will invest in additional automation or advanced-manufacturing technologies in the next five years.
Justin Rose, a BCG partner and leader of the firm’s North American Industrial Goods Operations team, said: “Although interest in re-shoring remains strong, this year’s findings indicate that a number of companies are still holding back.
“This reinforces the fact that the USA can’t simply rely on positive global macro-economic trends, if it is to fully capture the opportunities created by the shifting economics of global manufacturing.”