There is some evidence that US manufacturers are at least reevaluating their offshore manufacturing strategies. According to a report released yesterday by Cook Associates Executive Search, 85 percent of 3,000 c-level executives polled in the low-volume, high-mix manufacturing space say production jobs might actually return to the US.
To be fair, in electronics manufacturing, high-mix, low-volume production has largely remained on our shores. Medical, defense, aerospace, and security equipment are among the leading electronic products still built in the US and Canada. Cook's survey cast a wider net than just electronics, including a range of small and midsize US manufacturers. However, Cook said in a press release that "low-volume, high-precision, high-mix operations, automated manufacturing and engineered products requiring technology improvements or innovation" are the jobs most likely to return.
Overseas costs are the leading factor in the executives' decision-making, according to the report. Wage inflation, particularly in China, has many managers concerned. But respondents also cited other factors:
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 slow economy is also contributing to a stay-at-home mentality, the report says. Companies are increasingly focusing on quality and customer service as differentiators, both of which are better managed locally. There's also a concern that certain skill sets are lacking in the Far East:
China 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.
@DennisQ, i also agree with you and Jay_Bond regarding pulling back the operation is nightmare especially when the lot of investment has already been done. I think that companies need to rethink in these times while setting up any shop. The globalization has shrunk the world but it has also shrunk the opportunity window to encash the investment cost as we have seen in recent times. Earlier companies (mostly manufacturing) used to think long term (more than 20 years or so) but i think they can not predict anything beyond 10 years now.
@tiralapur: it's too bad we are so cynical about polticians, but unfortunately it is well-deserved. You see candidates veer from their message b/c it is not popular with the voters. A year from now, I wonder if the US immigration policy will be so hotly debated and China will be blamed for all struggling economies.
I think it is too late to pull back, though--any country that wants to prosper will have to play a role in the global economy.
@Barbara, you can never trust politicians. They will do everything to secure their place in the parliament. Infact FDI in retail was dropped in India because of immense political pressure. Sometimes these key decisions are based on popularity of the decision.
@Jay_Bond, right, exactly, the situation is different if you've already estabished operations overseas. There's a great deal of cost associated with essentially starting over again elsewhere, not to mention a gigantic time investment.
It's a different situation for companies who have yet to build significant resources overseas or who haven't done any/much outsourcing at all.
This is not surprising at. There have been concerns that recent inflation overseas and U.S econommic woes would change some companies minds. The idea is great from certain standpoints, but does have some sticking points. Companies that have invested largely overseas have to weigh the cost options to onshoring. If they need to build new plants or update exisitng ones along with labor costs, how long will it take to recoup the money spent with savings from moving back stateside?
@tiralpur: that's an excellent question. My guess is, it depends on the economic situation in each country. A decade ago, the US was very much pro-globalization becuase the country and economy were doing well. It wasn't until unemployment started creeping up that patriotism became a factor in the population and beiieve me, it will also be factor in the upcoming US elections. I think it is too late to pull back, though--any country that wants to prosper will have to play a role in the global economy.
It is a tricky situation in that one can understand the desire to keep jobs local when there is high unemployment and recession but I wonder if corporations will risk further reduction in bottom line to appease the "Made in America" protaganists.
Barabara, I think most of the outsourcing happened in IT and BPO sector. In electronic industry outsourcing is very less because talented technical skills are important than cheap labour. Most of the manufacturing in electronic industries is happened in parent countries. On the other hand, going global is a universal trend in industry rather than narrowing the base root, so I think in order to make sure about their global presents, they has their own offices in each country either as a assembler or manufacturer.
EBN Dialogue enables and encourages you to participate in live chats with notable leaders and luminaries. Not only editors and journalists, but the entire EBN community is able to comment and ask questions. Listed below are upcoming and archived chats.
Thailand Stages a Comeback Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Microsoft Surface: Potential Winners & Losers What are the implications for the electronics industry supply chain of Microsoft Corp.'s decision to launch its own tablet PC? Join industry veteran and EE Times' systems and OEM expert Rick Merritt on Tuesday, July 3, at 12:00 pm EDT for a Live Chat on this subject.
Join EBN contributor Jennifer Baljko on Thursday August 23, 2012, at 11:00 a.m. EST for a live chat on how electronic manufacturers in Thailand have shored up their supply chain to reduce the impact of future natural disasters.
Peter Drucker famously said "Trying to predict the future is like trying to drive down a country road at night with no lights while looking out the back window." Yet in the razor's-edge world of electronics—with a lean supply chain and just-in-time demands—the need to know the future is vital.
You've heard the saying "the No. 1 supply chain risk is your people." That hasn't always been the case. But today's complex global supply chain requires a new type of multitalented employee. It's one who understands, finance, marketing, economics, is savvy with technology, graceful with relationships and can think analytically.
Where are these people? Are universities properly preparing the next generation supply chain professionals? How do train your existing workforce for these new, demanding positions?
Brian Fuller, editor-in-chief of EBN, will lead a 60-minute Avnet Velocity panel discussion that will ask and answer these and other questions swirling around today's supply-chain talent challenges.