PLANT

Offshoring outpaces reshoring to the US

New A.T. Kearney index shows a 20-point gap in 2013.

December 15, 2014   by PLANT STAFF

China's labour costs shot up 187% at factories, compared with 27% in the US.

China’s labour costs shot up 187% at factories, compared with 27% in the US.

CHICAGO — Although US manufacturing has been buoyed by a return of production from overseas, a new index by global consulting firm A.T. Kearney shows offshoring to foreign manufacturing markets outpaced reshoring in 2013 by 20 basis points.

The inaugural A.T. Kearney Reshoring Index tracked manufactured goods over a 10-year period to show the change in ratio between US manufacturing imports and gross output.

“While the so-called reshoring trend has helped improve the mood of US manufacturing since the recession, the reality is that the import value of manufactured goods into the US from 14 low-cost Asian countries has grown at an average of 8% per year in the last five years,” said Pramod Gupta, A.T. Kearney principal and study co-author.

The 2014 Reshoring Index also shows how the US stacks up in terms of attractiveness as a source of manufactured products versus countries like China, Bangladesh, and Cambodia.

Advertisment

Here are some highlights:

• Top three reshoring industries are electrical equipment, appliance and component manufacturing (15% of the cases); transportation equipment manufacturing (15%); and apparel manufacturing (12%).

• Executives cited improvement in delivery time as the top reason for reshoring, with quality improvement a close second, followed by brand/image.

• While there has been an overall lift in US manufacturing for five straight years since 2009, imports of offshored manufactured goods into the US have increased at a faster rate than any return of manufacturing operations to US soil and, for the 14 top offshoring locations combined, amounted to $630 billion in 2013.

The top 14 offshoring locations are China, Taiwan, Malaysia, India, Vietnam, Thailand, Indonesia, Singapore, Philippines, Bangladesh, Pakistan, Hong Kong, Sri Lankaa and Cambodia.

The Chicago-based A.T. Kearny said the index depicts flows of capital, not shifts in physical assets or employment levels. It represents the choice that US executives make between domestic production and offshore production to meet domestic and US demand.


Print this page

Related Stories