Decision makers at 106 companies across a broad range of industries responded to the survey, which BCG conducted in late February. Thirty-seven percent said they plan to re-shore manufacturing operations or are "actively considering" it. That response rate rose to 48 percent among executives at companies with $10bn or more in revenues - a third of the sample.
The top factors cited as driving future decisions on production locations: labor costs (57 percent), product quality (41 percent), ease of doing business (29 percent), and proximity to customers (28 percent). In addition, 92 percent said they believe that labor costs in China "will continue to escalate," and 70 percent agreed that "sourcing in China is more costly than it looks on paper."
The results are consistent with earlier BCG findings on the changing economics that are starting to favor the manufacturing of certain goods in the U.S. In a report released last month, U.S. Manufacturing Nears the Tipping Point: Which Industries, Why, and How Much?, BCG predicted that improved U.S. competitiveness and rising costs in China will put the U.S. in a strong position to add 2 million to 3 million jobs in a range of industries and an estimated $100bn in annual output by the end of the decade.
"These survey findings confirm our own analysis and what we are hearing from major companies," said Harold L. Sirkin, a BCG senior partner and coauthor of the firm's "Made in America, Again" series, which began last year. "Companies are realizing that the economics of manufacturing are swinging in favor of the U.S., for goods to be sold both at home and to major export markets. This trend is likely to accelerate starting around 2015."
Interest in shifting manufacturing to the U.S. is particularly strong among companies in several sectors identified in BCG's March report as nearing a "tipping point." In these industry groups, China's cost advantage is likely to shrink within the next few years to the point where companies should rethink where they produce certain goods, mainly those for sale in North America. These tipping-point sectors are transportation goods, appliances and electrical equipment, furniture, plastic and rubber products, machinery, fabricated metal products, and computers and electronics. BCG predicts that production of 10 to 30 percent of U.S. imports from China in these industries, which account for approximately 70 percent of goods that the U.S. imports from that nation, could shift to the U.S. before the end of the decade.
In the new survey, 67 percent of respondents in rubber and plastic products, 42 percent in machinery, 41 percent in electronics, 40 percent in computers, and 35 percent in fabricated metal products said they expect that their companies will re-shore production from China to the U.S.
"Not long ago, many companies regarded China as the low-cost default option for manufacturing," observed Michael Zinser, a BCG partner who leads the firm's manufacturing work in the Americas. "This survey shows that companies are coming to the conclusion surprisingly fast that the U.S. is becoming more competitive when the total costs of manufacturing are accounted for."
