U.S. Manufacturers Shifting Activities Back from Asia to America

The study, conducted by global management consulting firm Booz & Company with the University of Michigan’s Tauber Institute for Global Operations, found that the future of U.S. manufacturing depends on decisions that are currently being made by the private and public sectors.

 

Today, U.S. manufacturers provide about 75% of the products that Americans consume. But that number could soar to 95% within a few years, if business and government leaders take the right actions. Conversely, if the sector remains neglected, that output could fall by half, meeting less than 40% of U.S. demand.

 

“As labor costs and currency rates play a smaller part in manufacturing decisions, there is an opportunity for U.S. business leaders and policymakers to rise to the challenge and create conditions that support manufacturing,” said Arvind Kaushal, Booz & Company Partner. “The potential for a rebound is there, but only if the right actions are taken.”

 

Indeed, the survey confirmed that manufacturers see resilience in the sector, in spite of today’s challenges. More than 65% of survey respondents said that they intend to continue investing in new U.S. manufacturing assets and technologies through 2025, and many are shifting manufacturing activities back from Asia and Latin America to the U.S., Canada, and Mexico.

 

Although several sectors show the potential for growth, the study found that overall more than 50% of U.S. manufacturing jobs are at risk — along with nearly 50% of the value added by U.S. manufacturing. This is largely due to several pressures pushing manufacturers outside the U.S.

 

Labor costs are less and less the crucial factor; others include regulatory restrictions and declines in manufacturing education and professional status compared to other countries like China.

 

“If U.S. companies rush toward emerging economies without continuing to invest in their own country, American manufacturing could fall woefully behind in new plant and production technology, losing its innovation edge and making revival more difficult,” said Tom Mayor, Senior Executive Advisor for Booz & Company. “Fortunately the U.S. has a strong base to build on, and manufacturing can reach long-term competitiveness by focusing on the right priorities.”

 

 

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