April 20, 2012, 2:35 p.m. China may no longer be the go-to place for American manufacturers looking for cheap labor and favorable policies. A new report shows many large companies are looking to move their production facilities back to the States.
Of the 106 executives surveyed by Boston Consulting Group, 37% said they were planning to or actively considering “reshoring” their factories in the U.S.
And that’s just for U.S.-based companies with annual sales of more than $1 billion. Among manufacturers who make $10 billion or more a year, 48% of executives said they want to relocate operations back home.
The urge is especially pronounced among leaders of companies working in industries responsible for 70% of the goods imported to the U.S. from China: transportation goods, electrical equipment, furniture, computers and electronics and more.
Those executives predict that as much as 30% of manufacturing in their industries could return to the U.S. from Asia by the end of the decade.
“Not long ago, many companies regarded China as the low-cost default option for manufacturing,” said Michael Zinser, a partner with the consulting group. “This survey shows that companies are coming to the conclusion surprisingly fast that the U.S. is becoming more competitive when the total costs of manufacturing are accounted for.”
Blame rising Chinese wages and increasingly complicated logistics. More than half of the manufacturers who said they would move factored in high labor costs; 92% said such costs will continue to rise.
More than four in 10 executives pointed to product quality, while 29% said it would be easier to do business in the U.S. About the same number also said that closer proximity to their customers would be an advantage.
The report is in line with recent forecasts that manufacturing could help lift the U.S. recovery. The Boston Consulting Group earlier prophesied that the country could add up to 3 million jobs and $100 billion in annual output by the end of the decade.
