A.T. Kearney Releases Inaugural Reshoring Index®
A.T. Kearney recently released its 2014 Reshoring Index®, the first in a series of studies looking objectively at the rate and pace of the return of manufacturing operations to the U.S. In this inaugural Index, manufactured goods flows are tracked over a 10-year period to show the change in ratio between U.S. manufacturing imports and gross output during that time period.
The goal of the Index is to find out whether companies are indeed leaning toward reshoring operations, and if so, what are the motivators driving them. The index is expected to show a year-over-year decline, lower by 20 basis points from 2013, as offshoring to foreign manufacturing markets outpaces reshoring.
According to A.T. Kearney, the import value of manufactured goods into the U.S. from 14 low-cost Asian countries has grown at an average of 8 percent per year in the last five years. The 2014 Reshoring Index is not only an indicator of U.S. manufacturing capital flows, but also how the U.S. stacks up in terms of attractiveness as a source of manufactured products versus countries like China, Bangladesh, and Cambodia.
Key highlights include:
1) The top three reshoring industries are electrical equipment, appliance and component manufacturing, with 15 percent of the cases; transportation equipment manufacturing, with 15 percent; and apparel manufacturing, which previously had not been expected ever to come back, with 12 percent.
2) Improvement in delivery time led the reasons executives gave in favor of reshoring, with quality improvement a close second and followed by brand/image.
3) While there has been an overall lift in U.S. manufacturing for five straight years since 2009, imports of offshored manufactured goods into the U.S. have increased at a faster rate than any return of manufacturing operations to our soil and, for the 14 top offshoring locations combined, amounted to $630 billion in 2013.
Those 14 top offshoring locations are China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lanka, and Cambodia.