American Executives Move Manufacturing Out of China

Researchers at the Boston Consulting Group (BCG) reported:

The firm’s third annual survey of senior manufacturing executives at companies with sales of $1 billion or more found that the number of respondents who said that their companies are already bringing production back from China to the United States had risen 20 percent — from roughly 13 percent to 16 percent — in the past year. The number who said that they would consider returning production in the near future climbed 24 percent — from about 17 percent to 20 percent. And a majority (54 percent) expressed interest in reshoring, validating last year’s result (also 54 percent).

Some experts have said that manufacturing has started to move from China to Mexico to take advantage of lower-cost labor. Even that process has started to change. BCG’s survey showed:

Another noteworthy finding this year: respondents indicated that the U.S. had surpassed Mexico as the most likely destination for new manufacturing capacity to serve the U.S. market. While the percentage of executives who chose the U.S. rose from 26 percent to 27 percent, the percentage who chose Mexico slipped from 26 percent to 24 percent.

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The information flies in the face of theories that the American manufacturing sector would continue to whither. Not so, BCG reports:

In addition, respondents predicted that the U.S. would account for an average of 47 percent of their total production in five years, reflecting a 7 percent increase in U.S. capacity compared with last year’s results. Only 11 percent of their capacity would be in China, a 21 percent decrease from last year. Respondents forecast that the share of production in Mexico, Western Europe, and the rest of Asia would also drop.

The widespread opinion that U.S. and state tax rates, expensive labor and an old manufacturing infrastructure would continue to erode the American manufacturing sector apparently are not universally true.