Many U.S. companies active in China have moved some operations out of the country – 38% relocated to North America.

My APICS Inland Empire Chapter hosted a program on “Changing Trade Policies and its Effect on Reshoring” with Michele Nash-Hoff, author of “Rebuild Manufacturing – the key to American Prosperity”. And, interestingly, the Institute of Management Accountants (IMA) Orange County chose “Onshoring Profits: Manufacturing is Not Dead Yet” from a long list of topics and asked that I speak on its impact. Thus, it seems only appropriate to discuss a few common themes:

1. U.S. firms are leaving China as conditions worsen. Actually, 25% of U.S. companies active in China have moved some operations out of the country.  38% relocated to North America.
2. In 2014/2015, parity was reached between offshoring & returning jobs.
3. 7 industries have reached the tipping point of returning to the U.S. and these sectors account for 70% of U.S. imports. For example, computer electronics, electrical equipment, and furniture make the list.
4. Using purchase price or landed cost do NOT capture total cost of ownership and can lead to incorrect sourcing decisions from a financial viewpoint.
5. 70% of executives are thinking about reshoring.

Where are you sourcing from currently? Don’t just jump on the new bandwagon of reshoring – but you should give your total cost of ownership a second look as well as dig into your customers’ expectations and sourcing impacts. You might just be surprised as to what this new view tells you!

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