Rebound in Domestic Manufacturing from Offshore Locations

July 31, 2012
'The U.S. and its manufacturing base is more competitive than at anytime in a generation,' according to a real estate industry research report.

Through 2020, jobs will be coming back to the U.S. from offshore locations, according to a new report by CoreNet Global, an association of corporate real estate executives.

In a survey conducted in conjunction with the Corporate Real Estate 2020 research, 51% of corporate real estate asset managers either agreed or strongly agreed that there would be a rebound in domestic manufacturing from offshore locations. This recovery will be driven both by companies bringing manufacturing plants and jobs back to the U.S. or choosing not to off-shore in the first place, according to the report.

"On-shoring in the U.S. will continue to gain steam due to changing global cost and supply chain dynamics," said Dennis Donovan, principal with WDG Consulting. "The U.S. and its manufacturing base is more competitive than at anytime in a generation."

The trend is already occurring as U.S. manufacturing jobs have rebounded from a 10-year low of 11,458,000 in January 2010 to a projected 11,962,000 ending June 2012, according to the U.S. Bureau of Labor Statistics.

The 4.4% increase marks a gain of more than a half million new jobs.

"The labor cost arbitrage will likely diminish as a primary strategic driver as urbanization and industrialization trends in developing nations run their course," Chris Horblit, president of Fidelity Real Estate Co.

For example labor costs have been rising dramatically in China. In Southern China is at the point where it is at 20% of U.S. labor costs.

"Labor costs combined with ongoing security and quality concerns, as well as rising costs to transport goods and people, may well spark a marked turn to (on-shoring) by 2020," explained Horblit.

An additional factor, according to the research, is that manufacturing in the U.S. avoids a growing problem for major corporations operating in China and other developing markets - the lack of protection of intellectual property. Top executives from companies including GE, Microsoft, Kawasaki Heavy Industries, BASF and Siemens are among those firms that have criticized China for not safeguarding foreign companies' proprietary information, a failure that has cost these companies billions of dollars.

Popular Sponsored Recommendations

Voice your opinion!

To join the conversation, and become an exclusive member of IndustryWeek, create an account today!