The predictions of a re-shoring trend may be greatly overblown.
I commented on this post over on Forbes: “Why Mass Employment in Manufacturing Isn’t Coming Back: It’s The Productivity“.
While it’s true that increased labor rates and perceived supply chain risks in China and other “low-cost countries” may prompt some manufacturers to “re-shore” production back to the US, the number of jobs landing on US shores will disappoint those reading the exaggerated re-shoring predictions in the western media.
As indicated in the Forbes post I referenced above, 100 Chinese jobs do not translate into 100 re-shored jobs, because productivity is higher on the U.S. side, and fewer workers are required to produce the same value. Also, as I commented, the re-shored worker is more likely to use components and materials pre-processed in China, where the corresponding Chinese worker would have used components and materials processed in-house.
One major driver of exaggerated and breathless re-shoring prediction was last year’s Boston Consulting Group’s report: “Made in America Again” stating that Chinese labor will reach cost parity with US labor around 2015, which will make Chinese manufacturing unattractive for export manufacturing. Maybe (who am I to contradict BCG?), but it seems the report is counting on some tenuous predictions:
Now BCG has come out with a followup survey (as reported here) stating that more than one-third of manufacturing executives of large (over USD1B) corporations are “planning” or “actively considering” re-shoring production back from China. They surveyed 106 of those companies.
My questions (I don’t have the original report) would be: