More and more U.S. businesses are realizing their decisions to move manufacturing jobs overseas wasn't all it was cracked up to be, a new study finds.
Research from Tobias Schoenherr, a Michigan State University assistant professor and supply chain expert, found that an increasing number of U.S. firms are moving, or considering moving, their international manufacturing operations back to domestic soil.
The study shows that 40 percent of manufacturing firms believe there is an increased effort to move manufacturing plants back to the U.S. from countries such as China and India. In addition, 38 percent of the companies researched indicated that their direct competitors have already brought manufacturing jobs back to the U.S. from overseas.
"Going overseas is not the panacea that it was thought of just a decade or so ago," Schoenherr said, adding he was surprised by the study's results. "Companies have realized the challenges and thus are moving back to the United States."
The research revealed that rising labor costs in emerging countries, high oil prices and increasing transportation costs and global risks, such as political instability, are the motivating factors in bringing manufacturing operations back home.
The study found that the aerospace and defense, industrial parts and equipment, electronics, and medical and surgical supplies are the industries leading the "reshoring" trend.
In addition to rising costs and global risks, Schoenherr said companies are concerned with the erosion of intellectual property overseas and product quality problems.
"From my communication with some firms, I also sense a genuine desire to help the U.S. economy and to bring back jobs," Schoenherr said.
The study, co-authored by Wendy Tate and Kenneth Petersen of the University of Tennessee and Lisa Ellram of Miami University (Ohio), is based surveys of more than 300 businesses. The Council of Supply Chain Management Professionals sponsored the research.