A year ago, I wrote a blog about how "reshoring" might not be the answer for reviving manufacturing in the U.S. Now, according to a report just released by global consulting firm A.T. Kearney, it appears that manufacturers might agree.
The report, the first in a series of studies looking objectively at the rate and pace of the return of manufacturing to the U.S., shows that the move to reshore operations actually slowed in 2014 compared to 2013. The primary cause of the year-over-year decline, according to the report, is that outsourcing is still outpacing reshoring.
U.S. manufacturing activity has increased steadily for the last five years, but imports of offshored manufactured goods also continue to grow. In 2013, the value of goods from the top 14 offshoring locations totaled $630 billion.
That said, some industries show stronger reshoring trends than others, including electrical equipment, appliance and component manufacturing, with 15 percent of the cases included in A.T. Kearney's database; transportation equipment manufacturing, with 15 percent; and apparel manufacturing, which previously had not been expected ever to come back, with 12 percent.
And slow compensation growth in the U.S. may make manufacturing here more attractive, according to a report from The Conference Board. In 2013, hourly compensation costs for American manufacturers averaged $36.34, up just $1.59 from 2010. This represents slower growth than even the crisis years of 2007-10, when hourly costs grew $2.71.
While the lower labor cost may make manufacturing in the U.S. more appealing, it could negatively impact recruiting – a perennial challenge for companies looking to replace a rapidly aging work force.
