Distribution Growth Opportunities for 2011

Nov. 16, 2010
Global shifts in manufacturing, consumption trends and international competition are three leading factors that will shape the future of goods movement and the demand for warehouse and distribution space, according to a report issued by The NAIOP Research Foundation.

The report is titled Trends in Global Manufacturing, Goods Movement and Consumption, and Their Effect on the Growth of United States Ports and Distribution. It notes that while supply chain tracking systems and logistics networks are getting better at supporting production sites in regions offering lower labor costs, the extra distance and the challenges of delivering parts for servicing production often compromise supply chain predictability. Additionally, managing the longer and more complex supply chain adds expense, which must be tracked to make sure it does not erase lower-cost labor benefits.

In 2011, China is expected to out-produce the United States for the first time, producing $1.87 billion in goods output while the United States is expected to produce $1.71 billion in goods output. In the United States, this production value has created 12 million jobs within the manufacturing industry, which accounts for approximately 10 percent of the overall United States workforce (2).

Additionally, U.S. government policies have a profound impact on manufacturing and manufacturing-related employment in the United States. Decisions that are made by multi-national corporations go well beyond the selection of manufacturing locations, and include decisions about where to locate corporate headquarters, research and development centers, production centers and distribution networks. Four have a varying impact on when, where and why companies select and locate facilities:

• Corporate income tax policies
• Research and development policy
• Export policy
• Environmental policy

A key to retaining competitiveness and attractiveness in the United States is to re-frame business policies with a focus on corporate taxes, research and development taxes and consistent application of policy regulations, the report concludes. This is vital to ensure that companies based in the United States are not hindered and that there is an environment where investment is seen as less risky in the United States than in other countries.