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US firms pulling out manufacturing operations from India, China | | A growing number of American firms are moving or considering moving their manufacturing operations back to domestic soil from overseas countries such as India and China, a new study has revealed.
According to a study, Tobias Schoenherr, a Michigan State University supply chain expert, the trend is being fueled by rising labor costs in emerging countries, high oil prices and increasing transportation costs, global risks such as political instability and other factors.
"Going overseas is not the panacea that it was thought of just a decade or so ago. Companies have realized the challenges and thus are moving back to the United States ," Schoenherr, assistant professor in
MSU's top-ranked Department of Supply Chain Management. The study found that 40
percent of manufacturing firms believe there is an increased movement of "reshoring",
or moving manufacturing plants back to the United States from countries such as
China and India . While the results differed by industry, the trend was led by
aerospace and defense; industrial parts and equipment; electronics; and medical
and surgical supplies, the study said.
"We were surprised by the large percentage of firms indicating that they are considering reshoring," Schoenherr said. The study also found that nearly 38 percent of companies indicated that their direct
competitors have reshored. In addition to rising costs and global risks, Schoenherr
said that companies are concerned with the erosion of intellectual property overseas
and product quality problems, which can be difficult to fix when dealing with
multiple time zones and language and cultural barriers. The study, sponsored by
the Council of Supply Chain Management Professionals, is based on a survey of
319 firms.
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