85% of Execs See Manufacturing Jobs Returning to U.S.

Dec. 15, 2011
Overseas wage inflation, logistics cited as leading factors in reshoring.

A survey of C-level and VP-level manufacturing executives, conducted by Cook Associates Executive Search, finds that 85% of manufacturing executives see the possibility of certain manufacturing operations returning to the U.S., with 37% citing overseas costs as the major reason. Logistics concerns were cited by 19%, while 36% stipulated other reasons, including economic/political issues, quality and safety concerns, patriotism and overseas skills shortages for highly technical manufacturing processes.

The survey identified low-volume, high-precision, high-mix operations, automated manufacturing and engineered products requiring technology improvements or innovation as the primary forms of manufacturing returning to the U.S.

"The executives we polled told us that wage inflation in traditional overseas venues, especially China, is changing the value proposition for American manufacturers," says Kevin Logterman, managing director, Industrial and Family Business for Cook. "Once, costs were the primary driver for moving manufacturing offshore, but now companies are doing the math and thinking more about staying at home. Also, executives told us that because logistics are complex to begin with, the financial argument has to be compelling and the dynamics are changing."

Logterman says manufacturers are depending more on quality and customer service to serve as differentiators in a slow economy and they are managed better domestically. "They also said that skill sets for certain manufacturing functions are not readily available overseas -- China and Asia generally are unable to meet the demand for skilled workers," Logterman adds. "Finally, patriotism was cited as a factor as executives looked for a return to a Made in America' mentality in the U.S."

How will such a shift affect the job market? "With increased manufacturing here in the U.S., we would expect increasing demand for engineering, product development, operations and finance positions," says Logterman. "We'll also see demand increase for finance/accounting specialists (CFOs, controllers) who understand overseas operations and are able to calculate the true costs for exporting since they are difficult to quantify."

Cook Associates Executive Search polled nearly 3,000 manufacturing executives primarily in small- to mid-sized U.S. companies from October 13 through November 18, 2011. Participants consisted of C-level executives (CEO, CFO, COO) and key functional vice presidents (operations, manufacturing, supply chain).The survey data was supplemented by written comments submitted by individual executives.

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Steve Minter | Steve Minter, Executive Editor

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An award-winning editor, Executive Editor Steve Minter covers leadership, global economic and trade issues and energy, tackling subject matter ranging from CEO profiles and leadership theories to economic trends and energy policy. As well, he supervises content development for editorial products including the magazine, IndustryWeek.com, research and information products, and conferences.

Before joining the IW staff, Steve was publisher and editorial director of Penton Media’s EHS Today, where he was instrumental in the development of the Champions of Safety and America’s Safest Companies recognition programs.

Steve received his B.A. in English from Oberlin College. He is married and has two adult children.

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