A consulting firm study indicates U.S. manufacturers are returning some jobs to the United States from China.
A number of American companies are bringing manufacturing jobs back to the United States, according to a study from a global management consulting firm.
The Boston Consulting Group, a firm that advises companies on business strategy, has issued a new study that shows that “more than half of U.S. based manufacturing executives at companies with sales greater than $1 billion are planning to bring production to the U.S. from China, or are actively considering it.”
The effort to bring manufacturing jobs home is known as “reshoring’’ and according to the BCG study, 54 percent of executives are planning to “reshore’’ or are considering it. That’s a large increase from the 37 percent of executives who responded that way in a BCG survey in February 2012.
The study was conducted among more than 200 executives with companies that manufacture in the United States and overseas and make products for both the U.S. market and for non-U.S. markets.
BCG believes the desire to reshore stems from a change in labor costs (lower than in the past in the United States and rising overseas), and product quality. Other decision-making factors include proximity to customers, access to skilled labor, transportation costs and ease of doing business.
“The wide range of reasons executives cite for shifting production shows that companies are becoming more sophisticated in their understanding of all the factors that must be considered when deciding where to manufacture,’’ said BCG representative Michael Zinser. “When you look at the total costs of production for many goods, the U.S. appears increasingly attractive.”
Reshoring has caught the attention of Wal-Mart, which has been promoting a new image based on the desire to carry more products made in the United States. In January, the company announced plans to lead “an American renewal in manufacturing” by buying $50 billion in U.S. made products over the next 10 years.
“This is not a public relations effort,’’ said Bill Simon, CEO of Wal-Mart, at the Reuters Global Consumer and Retail Summit in early September. “This is an economic, financial, mathematical-driven effort. The economics are substantially different than they were in the 80s and 90s.”
Labor costs have risen in China by 21 percent in recent years. At the same time, economics have caused the American workforce to be more flexible in its demands, dropping labor costs domestically.
Reuters pointed to a Wisconsin company, Hampton Products International, which manufactures locks and door hardware. Hampton CEO H. Kim Kelley explained his company’s decision to start “reshoring’’ manufacturing to the U.S. which it began in 2008, citing better control over the manufacturing process, ability to respond swiftly to customer concerns, and a much smaller impact on the environment because American manufacturing plants use less energy than Chinese plants do.
“The benefits are obvious,’’ Kelley said. “We cut our costs, improve our sustainability, reduce the cost of finished goods inventory and create U.S. jobs.”
The reshoring is not likely to take place in the technology areas, because most component suppliers are based in Asia, and skilled labor in technology manufacturing is more plentiful overseas. Similarly, clothing manufacturers are likely to continue to use overseas plants because they require more manual labor and such labor costs are still cheaper outside the U.S.
Kent McDill is a staff writer for Millionaire Corner. McDill spent 30 years as a sports writer, working for United Press International and the Daily Herald of Arlington Heights, Ill. From 1988-1999, he covered the Chicago Bulls for the Daily Herald, traveling with them every day through the nine-month season. He also covered the Bulls for UPI from 1985-88, and currently covers the team for www.nba.com. He has written two books on the Bulls, including the new title “100 Things Bulls Fans Should Know And Do Before They Die’, published by Triumph Books. In August 2013, his new book “100 Things Bears Fans Should Know And Do Before They Die” gets published.
In 2008, he resigned from the Herald and became a freelance writer. The Herald hired him to write business features and speeches for the Daily Herald Business Conferences and Awards presentations.
McDill also writes a monthly parenting column for the Herald’s Suburban Parent magazine.
McDill is the father of four children, and an active fan of soccer, Jimmy Buffett and all things Disney.