MFG 2.0

Production To Return To U.S. Shores?

Yes, in the short run. Long term, probably not, at least according to a new survey by Deloitte.

According to the survey results:

Despite intense global competition, manufacturers consider North America the most desirable region for expansion over the next three years.

Companies have expansion plans for a variety of operations, including sales, service, research and development, and sourcing.

While expansion plans are global, North America -- especially the United States -- was cited as the No. 1 likely location in the short term. Most surprisingly, these manufacturers seem to have a renewed emphasis on North America as the home for actual production facilities, hoping to turn around an area that has been lagging.

As far as what areas of the value chain might see expansion, the survey found:

Sales and services topped the list with 76 percent planning to expand sales in the United States, 58 percent in Canada and 67 percent in Mexico.

Sourcing of raw materials and parts (50 percent in China, 49 percent in the United States, and 43 percent in Mexico) and production (44 percent in the United States, 37 percent in Mexico and 37 percent in China) rounded out the top three priorities.

Overall, the vast majority of respondents said North America will not lose competitive ground in those areas over the next five years.

A significant number said they believe North America will become even more competitive by 2012 in sales and marketing (45 percent), information technology (41 percent), customer service (37 percent), R&D/engineering (36
percent) and finance/accounting (34 percent).

Not surprisingly, survey respondents painted "a gloomy picture of this region's ability to compete over the long run with lower-cost locations for production, especially Asia."

According to the survey:

More than half of survey respondents (61 percent) said they expect North America to become even less competitive globally as a site for production by 2012.

The key barriers to making production competitive
globally were seen as:

Labor cost (cited by 71 percent), tax policy (66
percent), work rules (66 percent), lack of availability of skilled labor (51 percent) and costs of raw materials and energy (56 percent).

The survey also notes, somewhat drily, that "these were the issues most frequently cited by executives surveyed as areas that governments should address as matters of public
policy."

Wait, is it an election year or something? Is there something the fine folks at Deloitte are trying to tell us?

As with all firm-sponsored surveys, take it with a shaker of salt, but still some interesting numbers.

TAGS: Innovation
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