More manufacturers bringing production back from China, study finds

U.S.-based executives at large companies remain bullish on U.S. manufacturing, and their actions are starting to show it, according to new research by The Boston Consulting Group’s (BCG’s) Center for Consumer and Customer Insight.

The firm’s third annual survey of senior manufacturing executives at companies with sales of $1 billion or more found that the number of respondents who said that their companies are already bringing production back from China to the U.S. has risen 20 percent—from roughly 13 percent to 16 percent—in the past year. The number who said that they would consider returning production in the near future climbed 24 percent, from about 17 percent to 20 percent. And a majority (54 percent) expressed interest in reshoring, validating last year’s result (also 54 percent).

The 2014 survey, conducted in August, drew responses from 252 decision-makers across a range of industries.

“These findings show that not only does interest in repatriating production to the U.S. and creating American jobs remain strong but also that companies are acting on those intentions,” said Harold L. Sirkin, a BCG senior partner.

Another noteworthy finding this year: Respondents indicated that the U.S. had surpassed Mexico as the most likely destination for new manufacturing capacity to serve the U.S. market. While the percentage of executives who chose the U.S. rose from 26 percent to 27 percent, the percentage who chose Mexico slipped from 26 percent to 24 percent.

In addition, respondents predicted that the U.S. would account for an average of 47 percent of their total production in five years, reflecting a 7 percent increase in U.S. capacity compared with last year’s results. Only 11 percent of their capacity would be in China, a 21 percent decrease from last year. Respondents forecast that the share of production in Mexico, Western Europe, and the rest of Asia would also drop.

By a 3-to-1 margin, respondents also predicted that reshoring would create U.S. manufacturing jobs within five years. Fifty percent of the respondents said that they expect to boost their U.S. manufacturing workforces by 5 percent or more. Only 17 percent predicted that their companies would be employing at least 5 percent fewer manufacturing workers in the U.S. five years from now. The survey findings reinforce a previous BCG estimate that reshored production, along with rising exports, could create between 600,000 and 1 million direct manufacturing jobs by 2020.