Reshoring Surveys

Whether it is termed total landed cost, total cost perspective, total cost of ownership, or something similar, it is obvious businesses have expanded beyond myopically focusing on the cost of labor when deciding where to locate facilities. A number of surveys have attempted to ascertain how many companies are considering to reshore activities as well as what factors were driving those decisions.

A 2012 MIT survey suggests that roughly a third of those respondents indicated they were “considering” reshoring production to the United States while approximately 15 percent were “definitely” planning to do so. Reasons sighted were similar to those discussed earlier: time-to-market (73.7 percent), cost reductions (63.9 percent), product quality (62.2 percent), more control (56.8 percent), hidden supply chain management costs (51.4 percent), and to protect intellectual property (48.5 percent).

A survey conducted by the Council of Supply Chain Management Professionals (CSCMP) found that forty percent of the 319 respondents “perceived a trend toward reshoring in their industries,” with the trend being most intense in the following industries: aerospace and defense, industrial parts and equipment, electronics, and medical and surgical supplies. More than 60 percent of the respondents indicated the “stability of transportation costs” would increase in importance for their location decision making process in the next three years. Knowledgeable logistical service providers as well as the availability and reliability of transportation were other important logistical drivers.

The Harvard Business School conducted a survey amongst 10,000 of its alumni in 2012. The respondents indicated three possible location decisions: potentially moving existing activities into the United States, potentially siting new activities in the United States or elsewhere, and potentially moving existing activities out of the country. Results showed a mix bag in terms of the United States winning those location decisions, but overall the US respondents chose to locate in the United States 32 percent of the time.

Table 1: Results from the Harvard Business School’s Decision Survey

Respondents were also asked about whether the business’s success would be more, equal, or less should it undertake more activities to benefit its local community. While about 22 percent believed such activities would add to the success of the business, approximately 71 percent felt such activities would be neutral (the authors stated the neutral response suggested the activities would pay for themselves). This hinting towards the idea of increased civic responsibility brings to mind the economic gardening theory as well as the German Mittlestand ethos.

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