Support Material

Work is shifting back to the United States because the apparent cost savings have steadily declined. In lower-wage parts of the world, manufacturing wages have steadily increased. Shipping costs have increased, too (and are currently fluctuating causing uncertainty) — and so has the value of the Chinese Yuan relative to the U.S. dollar (increasing 18 percent in the last 3 years). All of these increases undermine the savings from overseas manufacturing.

As these savings decline the traditionally less visible costs become more apparent. The ‘soft’ costs of foreign outsourcing, including high inventories, the difficulty of maintaining quality, additional overhead burdens and the poor market responsiveness that comes from an inflexible supply chain erode the benefits.

In a recent survey by the Archstone Group of U.S. and European companies, nearly 90 percent of respondents said they are now considering or have already implemented plans to rebalance manufacturing away from foreign sourcing toward greater use of domestic capacity.

This especially makes sense for products that are going to be assembled in the United States and primarily sold in the United States.

This year, MMI has seen even more of the ‘onshoring’ RFQ activity.