13.5 percent of manufacturers intend to move some manufacturing activities back to the U.S.
The MIT Forum for Supply Chain Innovation announced today that it has released survey results from its 2014 global manufacturing study led by MIT professor David Simchi-Levi and conducted with Supply Chain Digest, and will issue a full report on the results, titled, “Global Forces: The Transformation of U.S. Manufacturing.”
Key findings
In the 2014 study, 13.5 percent of U.S. manufacturing companies have reported that they have already made a decision to move some manufacturing activities back to the U.S., with 18.0 percent of U.S. manufacturers stating that they are “considering” bringing back manufacturing activities to the U.S.
U.S. manufacturers who stated they are “considering” re-shoring manufacturing activities responded that the majority of re-shoring activity for 2014 into 2016 would be focused on production (9.4 percent) followed by packaging (5.9 percent), design (3.6 percent), and assembly (3.6 percent).
Perhaps even more significant is that U.S. manufacturers who stated they were “definitively” planning on re-shoring manufacturing activities responded that the majority of their re-shoring activity for 2014 into 2016 would be focused on moving production back to the U.S.
Activity priorities were led by production (21.1 percent) followed by design (5.6 percent), assembly (5.0 percent), and Packaging (5.0 percent). As such, the data indicate an increasing trend to re-shore production activities back to the U.S. for some time to come.
In 2013, the report indicated for U.S. manufacturing companies a significant disparity between companies that are “considering” (33.6 percent) versus those that are “definitively” (15.3 percent) planning on re-shoring; the disparity was independent of company size. Data from the 2014 study indicate that this disparity has been significantly reduced, with 13.5 percent of U.S. manufacturers now “definitively” planning and 18.0 percent “considering.”
U.S. manufacturers reported that the two key drivers of the change in manufacturing are reducing risk/volatility (73 percent) and time to market (73 percent), followed by cost reductions/total landed cost calculations (60 percent), more control (53 percent), and hidden supply-chain costs (53 percent).
Looking ahead
The survey asked the participating U.S. companies to identify government actions that will accelerate the re-shoring process. According to the data, the top two government actions that would make a difference are tax credits (53 percent) and corporate tax reductions (53 percent), followed by providing ramp incentives (50 percent), providing better education training for required skills (41 percent), and providing better infrastructure (31 percent).
In total, 231 participants completed the survey, 122 of which were manufacturing-only companies. Out of those 122 companies, 89 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 (16.4 percent); food and beverage (9.0 percent); and electrical equipment (9.0 percent). By revenue, manufacturing-only companies that responded were categorized as: revenue under $1 billion (54 percent); revenue of $1 billion to $10 billion (25 percent); and revenue greater than $10 billion (21 percent).
For more information on the release of the full 2014 “Global Forces: The Transformation of U.S. Manufacturing” report, please email Lsheppar@mit.edu.
