Survey: U.S. — Not China — Most Likely Destination For Manufacturer Expansion

A newly released survey identifies the U.S. as the most likely location for expansion by leading American manufacturers.

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A newly released survey identifies the U.S. as the most likely location for expansion by leading American manufacturers.

The Boston Consulting Group polled 263 senior executives at U.S.-based manufacturers with at least $1 billion in annual revenues for its fourth annual survey.

Thirty-one percent said that their companies were likely to expand production in the U.S. compared to 20 percent that indicated China was the most likely destination.

Two years ago, the poll found that 30 percent identified China compared to 26 percent for the U.S.

In addition, the survey showed a 9 percent increase in the number of companies actively reshoring jobs back to the U.S. That percentage has increased by 250 percent since the initial survey in 2012.

“These findings underscore how significantly U.S. attitudes toward manufacturing in America seem to have swung in just a few years,” said BCG senior partner Harold Sirkin. “The results offer the latest evidence that a revival of American manufacturing is underway.”

A strong majority of respondents identified supply chain issues, shipping costs and proximity to customers as primary factors in company reshoring decisions.

And although wage growth in China helped erode that nation's manufacturing edge in recent years, the survey noted that companies are paying greater attention to "total cost."

"There is good reason to believe that the cost-competitiveness of the U.S. compared with China and many other major export economies will continue to improve in the near term," said Michael Zinser, co-leader of the firm's manufacturing practice.

The access to the advantages of automation and robotics are also increasing the competitive edge of the U.S. in manufacturing — with three-quarters expected to invest in advanced manufacturing technology — but the poll showed that companies still expected reshoring to develop more domestic jobs.

Half of respondents expected reshoring to boost company employment by at least 5 percent; 27 percent predicted an increase of at least 10 percent.

The report, however, also found that executives were slightly less optimistic than the 2014 survey, due to both global economic issues — such as energy prices and the strong dollar — and domestic issues such as health care costs, regulatory uncertainty and potential wage increases.

“Although interest in reshoring remains strong, this year’s findings indicate that a number of companies are still holding back,” said BCG partner Justin Rose.

(AP Photo)(AP Photo)
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