MIT group releases re-shoring report

Survey conducted by the MIT Forum for Supply Chain Innovation indicates nearly half of U.S. manufacturing companies are thinking of re-shoring jobs.


The MIT Forum for Supply Chain Innovation announced today that it has released a report, “U.S Re-shoring: A Turning Point,” based on the results of its 2012 U.S. re-shoring survey.

In total, 340 participants completed the survey, of which 198 were manufacturing-only companies. Out of those 198 companies, 156 were U.S. companies, defined as having their headquarters in the United States.

The top three manufacturing-only industries that responded to the survey were: Computers and Electronics (19.2 percent), Food and Beverage (10.6 percent) and Chemicals (8.1 percent). The category, "Other Manufacturing Companies," includes manufacturers of personal care products, golf equipment and various other companies.

For U.S. manufacturing companies, the data indicates a significant disparity between companies that are "considering" versus those that are "definitively" planning on re-shoring, meaning to bring their manufacturing activities back to the United States. This disparity was independent of company size.

Specifically, 33.6 percent of respondents stated that they are "considering" bringing manufacturing back to the United States, while only 15.3 percent of U.S. companies stated that they are "definitively" planning to reshore activities. Time-to-market and controlling costs were two main reasons for re-shoring, according to the survey. Interestingly, one-third of the respondents did not answer this question, possibly indicating a reluctance to discuss the topic due to its sensitive nature.

The survey asked the participating U.S. companies to identify government actions that will accelerate the re-shoring process. According to the data, the number one government action that can make a difference is corporate tax reductions, with both providing tax credits and R&D incentives coming in second.

MIT Professor David Simchi-Levi, founder of the Forum, says, “Our survey indicates a significant shift in manufacturing footprint. Of course, the fact that 15.3 percent of the companies are moving manufacturing closer to market demand and others are considering such a move does not mean the end of manufacturing in low cost countries. It suggests that we are in the middle of a transformation from a global manufacturing strategy, where the focus is on low cost countries, to a more regional strategy, where China is for China and perhaps other emerging markets, U.S. (or Mexico and Latin America) is for the Americas and Eastern Europe is for European markets.”

About the MIT Forum for Supply Chain Innovation

The MIT Forum for Supply Chain Innovation is a community composed of academics and industry members whose support allows forum researchers to provide customer-focused solutions to design and manage the new supply chain. The Forum has pioneered a deeper understanding of the supply chain and its relationship to corporate strategy and has broad support from a wide cross-section of industry.

Manufacturing Technology Advisory board

In June 2012, the MIT Forum launched the Manufacturing Technology Advisory Board in response to Forum members’ request for technology transformation guidance. The board consists of MIT academic and research leaders with major technology providers and industry leaders to collaborate on key issues around U.S. manufacturing.

For more information, please contact:

Leslie Sheppard, Chief Strategy Officer
Email: Lsheppar@mit.edu
Tel: 617-500-5274


Topics: Industry, MIT Forum on Supply Chain Management, Supply chains, Business, Manufacturing, Global economy, Civil and environmental engineering

Comments

I've been happily following this trend in Manufacturing. Due to higher quality requirements, low energy prices, high transportation costs, and a willingness of workers to co-operate, manufacturing in North America is again viable. This is especially true of processes that require a lot of heat or energy input: one great example has been GE bringing back some manufacture of appliances. I don't expect to see labour intensive products to return - except for the case of the Maker movement. This has been another interesting trend in domestic manufacturing - low volume artisan products hand made by craftsmen. They typically work at home or in small shops with other likeminded individuals. Some can earn a living, and others can at least cover some living expenses by selling these products online. Exciting times in North America for those with design and manufacturing skills. -Andrew
US manufacturing was always innovation, quality and quantity oriented. The world copied it, produced it and sold it back to US. That was the most unfortunate era. The US economy was battered more when overseas outsourcing became the name of the game, little realizing that the "outsource" never contributed to the economic welfare of the world at large, but was only to benefit a few institutions in their respective locations. American industry has lot of potential to grow and prosper now when it is returning home.
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