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Made in America, Again: Third Annual Survey of U.S.-Based Manufacturing Executives

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BCG's latest manufacturing survey finds decision makers at large manufacturers expect the U.S. share of their production to rise an average of 7 percent in five years; half expect to boost U.S. factory jobs by 5 percent or more.

Published in: Economy & Finance
  • BCG’s survey results are consistent with the actual corporate behavior documented by the Reshoring Initiative. According to founder/president Harry Moser, the net loss of jobs to offshore has stopped. Net annual reshoring (reshoring minus offshoring) has gone from losing about 150,000 manufacturing jobs/year in 2003 to about zero in 2013. Despite this good progress, 50 years of offshoring means that there are still 3 to 4 million U.S. manufacturing jobs offshored! A good way to accelerate the reshoring trend is for companies to quantify all of the relevant costs, make more accurate sourcing decisions and thus bring back more of those offshored jobs while increasing profitability. The Reshoring Initiative’s Total Cost of Ownership Estimator™ is available no-charge for reevaluating the offshore/reshore decision. BCG emphasized how important it is for companies to consider the total cost, not just wages when making a sourcing decision. http://www.reshorenow.org/TCO_Estimator.cfm
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  • Excellent to see the focus of reshoring and looking at new technology to compete - definitely robotics and 3-D printing are going to be strong partners in the future.
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Made in America, Again: Third Annual Survey of U.S.-Based Manufacturing Executives

  1. 1. Do Not Reproduce More Than Two Slides or Charts Without Permission Made in America, Again Third Annual Survey of U.S.-Based Manufacturing Executives October 2014
  2. 2. 1 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission Executive summary Key takeaways from BCG’s third annual survey of U.S.-based manufacturing executives • 54% of respondents are considering bringing production back to the U.S. – Similar to 2013 finding and up nearly 50% since 2012 • 20% increase in the number that report that they are actively reshoring now – Growth on top of a nearly 90% increase from 2012 to 2013 •They anticipate a 7% rise in future manufacturing capacity in the U.S. and a 5% to 20% decrease in capacity in China, Western Europe, and Mexico •Respondents say that the U.S. has surpassed China and Mexico to become the most likely destination for companies that are shifting manufacturing capacity to serve the U.S. market •Access to a skilled workforce appears to be a relative U.S. strength •4.5 times as many manufacturers cite increased skilled labor as a driver for moving production to the U.S. than those who cite it as a reason for offshoring from the U.S. •The key driver is a desire to boost productivity and improve local economics •56% believe that decreasing costs in automation have improved their product competitiveness •71% believe that advanced manufacturing technologies will improve the economics of localized production •Executives who anticipate net job gains within the next five years outweigh those predicting declines by a 3-to-1 margin 1 2 3 4 5 Interest in reshoring production to the U.S. remains strong, validating our 2013 survey findings; the percentage of companies actively moving operations back to the U.S. is increasing Executives increasingly expect their U.S. manufacturing footprint to grow more than that in other countries The desire for increased regionalization, access to a skilled workforce, and local control of quality are the major drivers for expanding manufacturing capacity in the U.S. Most companies plan to increase investment in automation or other advanced manufacturing technologies within five years Executives believe in the potential for ongoing job creation
  3. 3. 2 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission Interest in reshoring production to the U.S. remains strong, validating 2013 survey results Sources: BCG Manufacturing Survey, February 2012, August 2013, and August 2014. Note: Numbers in the bar charts have been rounded; percentage changes outside the bar charts are based on the actual numbers before rounding. Question asked: “Given the fact that China’s wage costs are expected to grow, do you expect your company will move manufacturing to the United States?” Question asked only of companies that currently manufacture in China. N = 161. 71316388817101817200102030405060 Interest in reshoring manufacturing to U.S. (%) +47% Yes, we are already actively doing this Yes, we will move production to the U.S. in the next two years Yes, we are actively considering doing this, although we have not made a final decision Yes, we will consider doing this in the near future 2014 54 2013 54 2012 37 1
  4. 4. 3 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission Around 20% more respondents this year say that their companies are actively reshoring 1671305101520 Interest in reshoring manufacturing to U.S. (%) +20% +88% Yes, we are already actively doing this 2014 2013 2012 1 Sources: BCG Manufacturing Survey, February 2012, August 2013, and August 2014. Note: Numbers in the bar charts have been rounded; percentage changes outside the bar charts are based on the actual numbers before rounding. Question asked: “Given the fact that China’s wage costs are expected to grow, do you expect your company will move manufacturing to the United States?” Question asked only of companies that currently manufacture in China. N = 161.
  5. 5. 4 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission U.S.-based executives anticipate that a larger share of their total manufacturing capacity will be in the U.S. in five years 4414107121247118710150102030405060 -22% -5% -19% United States -21% +7% Rest of the World Rest of Asia China Anticipated mix of total manufacturing capacity in five years (%) +23% Mexico Western Europe 2 Survey year 2014 2013 Sources: BCG Manufacturing Survey, August 2013 and August 2014. Note: Numbers in the bar charts have been rounded; percentage changes outside the bar charts are based on the actual numbers before rounding. Question asked: "What percentage of your manufacturing [will be] located in each of the following regions (five years from now)?" Expected increase for the U.S. differs significantly from the outlook for China, Western Europe, and Mexico Note: Question addresses total manufacturing capacity, though the executives surveyed were based in the U.S.
  6. 6. 5 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission The U.S. has surpassed China and Mexico as the most likely destination for new capacity to serve the U.S. market Sources: BCG Manufacturing Survey, February 2012, August 2013, and August 2014. Note: Numbers atop the bar charts have been rounded; percentage changes outside the bar charts are based on the actual numbers before rounding. Question asked: "In the next five years, how will the supply chain change for the products you intend to sell inside the U.S.?” All other destination countries accounted for 18% of responses in 2013 and 26% of responses in 2014. 2 3026262324270102030 Most likely destination for new manufacturing capacity (%) -7 -2 +1 China Mexico United States 2013 2014 Survey year
  7. 7. 6 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission Companies that have reshored cite increased regional- ization, strong workforce and environment, and local control 7978696374717574131421281921171788101078810020406080100 Shorten our supply chain Respondents (%) Improve quality and yield Provide local control over manufacturing processes Make it easier to do business Access to skilled workforce and talent Be closer to suppliers Be closer to customers Reduce shipping costs Primary reasons for moving to U.S. Sources: BCG Manufacturing Survey, February 2012, August 2013, and August 2014. Note: Question asked: "Why did your company move production to the U.S. from another country? Please select how much you agree or disagree with each of the following reasons for change." 3 Strongly or somewhat disagree Strongly or somewhat agree Neutral • Strong workforce and business environment • Control over process and quality • Benefits of increased regionalization
  8. 8. 7 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission Manufacturers are ~4.5 times more likely to move production to the U.S. than from the U.S. to access skilled labor 3 1774020406080100 ~4.5x Production moved from the U.S.1 Respondents citing access to skilled workforce as a strong factor for moving production (%) Production moved to the U.S.2 Source: BCG Manufacturing Survey, August 2014. Note: Chart counts respondents who marked "Strongly or somewhat agree." Numbers atop the bar charts have been rounded; percentage changes outside the bar charts are based on the actual numbers before rounding. 1 Question asked: "Why did your company move production to another country from the U.S.? Please select how much you agree or disagree with each of the following reasons for change." 2Question asked: "Why did your company move production to the U.S. from another country? Please select how much you agree or disagree with each of the following reasons for change.”
  9. 9. 8 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission Executives plan to invest in automation or other advanced manufacturing to enhance product competitiveness 56711647225281710020406080100 Responses (%) Strongly or somewhat disagree Strongly or somewhat agree Neutral Decreasing automation cost improved my product competitiveness against products sourced from low-cost countries Manufacturing executives believe automation and advanced manufacturing will promote the following: • Reduce costs and increase their competitiveness • Allow them to benefit from being closer to suppliers and customers Source: BCG Manufacturing Survey, August 2014. Note: Task stated: "Please select how much you agree or disagree with each of the following reasons for change.” N = 252. 4 Advanced manufacturing will improve the economics of localized production The U.S. is strongly positioned to benefit from manufacturers that seek to increase regionalization, especially as automation costs decline We will invest in additional automation or advanced manufacturing technologies in the next five years
  10. 10. 9 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission Three times as many executives expect trends to drive net growth in U.S. manufacturing jobs within five years Source: BCG Manufacturing Survey, August 2014. Note: Question asked: "Based on current trends, what do you expect to happen to the number of manufacturing jobs in your company over the next five years?” 1Includes responses of less than +/-1% per year. 5 10% 17% 23% 34% 10% 6% 1% 40 30 0 20 10 Respondents (%) Increase by >20% Increase by 10%-20% Increase by 5%-9% Flat Decrease by 5%-9% Decrease by 10%-20% Decrease by >20% Job loss 50% of respondents anticipate net job creation 17% of respondents anticipate net job losses 1 Job creation Anticipated job creation outweighs loss by a nearly 3-to-1 margin
  11. 11. 10 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission Survey methodology Since 2012, The Boston Consulting Group (BCG) has conducted an annual online survey of senior- level, U.S.-based manufacturing executives. This year’s survey, which the firm's Center for Consumer and Customer Insight conducted in August, one year after last year's, elicited 252 responses. The responses were limited to one per company. Virtually all of the respondents work for companies that manufacture in the U.S. and overseas and make products for both U.S. and non-U.S. consumption. Respondents are decision makers in companies with more than $1 billion in annual revenues, across a wide range of industries: • Electronic and other electrical equipment and components • Computer equipment • Furniture and fixtures • Transportation equipment • Fabricated metal products, except machinery and transportation • Industry and commercial machinery • Rubber and miscellaneous plastic products • Petroleum refining and related industries • Stone, clay, glass, and concrete products • Printing, publishing, and allied industries • Apparel and other finished products made from fabrics and similar materials • Chemicals and allied products • Paper and allied products • Textile mill products • Primary metal industries • Food and kindred products • Leather and leather products
  12. 12. 11 Copyright © 2014 by The Boston Consulting Group, Inc. All rights reserved. Do Not Reproduce More Than Two Slides or Charts Without Permission This research is part of BCG’s series on the shifting dynamics of global manufacturing Authors of this research Selected publications and research in the series The Shifting Economics of Global Manufacturing: How Cost Competitiveness Is Changing Worldwide A report by The Boston Consulting Group August 2014 Majority of Large Manufacturers Are Now Planning or Considering “Reshoring” from China to the U.S. (press release) Survey findings by The Boston Consulting Group September 2013 The U.S. Skills Gap: Could It Threaten a Manufacturing Renaissance? A report by The Boston Consulting Group August 2013 Behind the American Export Surge: The U.S. as One of the Developed World’s Lowest-Cost Manufacturers A report by The Boston Consulting Group August 2013 U.S. Manufacturing Nears the Tipping Point: Which Industries, Why, and How Much? A report by The Boston Consulting Group March 2012 Made in America, Again: Why Manufacturing Will Return to the U.S. A report by The Boston Consulting Group August 2011 Note: Publications are available on BCG’s thought leadership portal, www.bcgperspectives.com, or at www.bcg.com. Harold L. Sirkin Senior partner and coauthor of The U.S. Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback (Knowledge@Wharton, November 2012) BCG Chicago Michael Zinser Partner, coleader of the Manufacturing practice, and coauthor of The U.S. Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback BCG Chicago Justin Rose Partner, leader of green energy in the Americas, and coauthor of The U.S. Manufacturing Renaissance: How Shifting Global Economics Are Creating an American Comeback BCG Chicago To request a media interview, please contact Eric Gregoire at gregoire.eric@bcg.com. To discuss the findings with a BCG expert, please contact Payal Sheth at sheth.payal@bcg.com. To read other publications in this series, please go to www.bcgperspectives.com.
  13. 13. bcg.com | bcgperspectives.com Thank you

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