Supply Chain Disruptions High

21% of OEMs said theyve returned some production to North America from low-cost countries in the second quarter of 2010, up from 12% in the previous quarter.

For the fourth straight quarter, more than one-third of North American manufacturers responding to the MFGWatch quarterly survey said they've experienced a significant supply chain disruption in the past three months with over half (51%) indicating they had suffered disruption.

The survey, conducted by MGG.com, a global sourcing marketplace for the manufacturing industry, also found that employment at larger North American sourcing plants and original equipment manufacturers (OEMs) fell in the most recent quarter.

A total of 20% of these respondents indicated that they added to employment for the period, down from 27% in the first quarter of 2010 -- an unexpected drop of 7%. A full 23% say they decreased staff, up from 10% in the first quarter of 2010 and above the 21% reported in the fourth quarter of 2009.

North American small and medium-sized manufacturers (SMMs) indicated improving business conditions, and employment in these shops and plants reported a significantly higher rate of growth than OEMs.

Surprisingly, SMMs added to their employment roles in the latest quarter -- 29% compared to 23% in the previous quarter. Only 18% say theyve eliminated jobs at their shops and plants, down from 20% in the previous quarter.

Expectations to increase the number of suppliers they engage for production rose to 43% from 32% in the previous quarter. However, only 8% actually grew their stable of suppliers-- the third straight quarter with such disparity. While nearly one-third (31%) expected to increase employment in the second quarter of 2010, only 20% did so.

Noteworthy among large North American manufacturers are their responses around supply chain risk and reshoring. For the fourth straight quarter, more OEMs indicated they had experienced significant supply chain disruptions. A walloping 51% say theyve experienced a significant disruption, compared to 44% in the previous quarter.

The responses to backshoring activity from large North American sourcing manufacturers suggest good news for SMMs in the coming months. Twenty one percent of OEMs said theyve returned some production to North America from low-cost countries in the second quarter of 2010, up from 12% in the previous quarter. Well over one-third (38%) said they will be researching bringing production into or closer to North America in the third quarter of 2010, up from 31% in the last quarter.

Also, for the fourth straight quarter, over one-third of SMMs (4%) said they've received inquiries or work from companies suffering from supply chain disruptions.

To view of copy of the report visit www.mfg.com/en/mfgwatch

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