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The MIT Forum for Supply Chain Innovation has released a report, “U.S Reshoring: A Turning Point,” based on the results of its 2012 U.S. reshoring survey.
In total, 340 participants completed the survey, of which 198 were manufacturing-only companies. Out of those 198 companies, 156 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 (19.2 percent), food and beverage (10.6 percent) and chemicals (8.1 percent). The category, “Other Manufacturing Companies,” includes manufacturers of personal care products, golf equipment, and various other companies.
For U.S. manufacturing companies, the data indicates a significant disparity between companies that are “considering” vs. those that are “definitively” planning on re-shoring, meaning to bring their manufacturing activities back to the United States. This disparity was independent of company size.
Specifically, 33.6 percent of respondents stated that they are “considering” bringing manufacturing back to the United States, while only 15.3 percent of U.S. companies stated that they are “definitively” planning to reshore activities. Time-to-market and controlling costs were two main reasons for reshoring, according to the survey. Interestingly, one-third of the respondents did not answer this question, possibly indicating a reluctance to discuss the topic due to its sensitive nature.
The survey asked the participating U.S. companies to identify government actions that will accelerate the reshoring process. According to the data, the No. 1 government action that can make a difference is corporate tax reductions; providing tax credits and R&D incentives tied for second place.
MIT Professor David Simchi-Levi, founder of the forum, says, “Our survey indicates a significant shift in manufacturing footprint,” notes MIT Professor David Simchi-Levi, founder of the forum. “Of course, the fact that 15.3 percent of the companies are moving manufacturing closer to market demand and others are considering such a move does not mean the end of manufacturing in low-cost countries. It suggests that we are in the middle of a transformation from a global manufacturing strategy, where the focus is on low-cost countries, to a more regional strategy, where China is for China and perhaps other emerging markets, U.S. (or Mexico and Latin America) is for the Americas, and Eastern Europe is for European markets.”
About the forum
The MIT Forum for Supply Chain Innovation is a community composed of academics and industry members whose support allows forum researchers to provide customer-focused solutions to design and manage the new supply chain. The forum has pioneered a deeper understanding of the supply chain and its relationship to corporate strategy, and has broad support from a wide cross-section of industry.
Manufacturing Technology Advisory board
In June 2012, the forum launched the Manufacturing Technology Advisory Board in response to forum members’ request for technology transformation guidance. The board consists of MIT academic and research leaders along with major technology providers and industry leaders who collaborate on key issues focused on U.S. manufacturing.
This article first appeared in the Jan. 29, 2013, issue of MITNews.