The once overwhelming cost advantage of producing goods overseas are not what they once were according to the Reshoring Institute’s latest survey of global manufacturers.
A growing number of businesses are rethinking their global manufacturing strategies. Due to rising foreign wages, rising tariffs on steel, aluminum, and electric components, and reconsiderations of the total cost of ownership, The Reshoring Institute predicts that companies will increasingly be motivated to participate in reshoring efforts in the coming years.
Here are some highlights from the study:
• More than half of the executives surveyed reported that they were planning or considering reshoring activities in the next five years.
• 97% said that they would consider a domestic source for parts if the price and quality were competitive to foreign suppliers.
• In addition to the growing attractiveness of U.S. markets, the unpredictability of tariffs and trade regulations leave companies conducting international business wary of unexpected cost increases.
• The survey found that from 2017 to 2018, the number of companies operating in multiple global locations decreased by 10%.
While the majority of companies reported interest in reshoring, some remain hesitant. Respondents were asked, “If you are considering reshoring and have not yet started, what if anything, is delaying you in doing so?”
When asked the factors that were causing companies to delay reshoring they provided the following reasons:
- 54% were concerned about high labor costs
- 50% said they did not have a facility in the U.S.
- 29%. were concerned about finding a workforce with the skills needed for production
- 21% were concerned about resistance from the Board of Directors
- 13 cited a lack of internal expertise
- 9% pointed to high material costs
- 8% were concerned about environmental regulations in the U.S.