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The best summation on reshoring vs offshoring
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Author Topic: The best summation on reshoring vs offshoring  (Read 2968 times)
Phil Westcough
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« on: September 08, 2011, 07:43:47 AM » Reply with quote

I found a very interesting survey conducted by the website G+ entitled "Is Onshoring the New Offshoring?" They surveyed 102 executives who are "...involved in shaping their corporate strategies for offshoring decisions." Here is the question they asked: "In the next 6-12 months, are you considering repatriating offshored jobs to the United States?"

The result was that 41% said they were considering doing so. The reasons given for bringing production back to the US were:

•Rising labor costs - Social unrest plus rising labor costs
•Supply chain complexities-Chains are getting "over stretched"
•Quality and value - QC is lacking and too big a time lag between decision making and production facilities
•Changing demands-Production moving to smaller quantities and more flexibility are increasingly desirable
The survey does note that offshoring is still most effective place to produce when an industry primarily employs unskilled labor. Much of the work for the toy industry is indeed done with unskilled labor so though some jobs may be coming home, it would appear that China, at least for the toy industry, will continue to remain attractive at least for a while longer.

http://www.giftsanddec.com/blog/Out_of_the_Toy_Box/42322-Are_Jobs_Coming_Home_.php
 
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Ron
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« Reply #1 on: September 09, 2011, 06:50:58 PM » Reply with quote

I found a very interesting survey conducted by the website G+ entitled "Is Onshoring the New Offshoring?" They surveyed 102 executives who are "...involved in shaping their corporate strategies for offshoring decisions." Here is the question they asked: "In the next 6-12 months, are you considering repatriating offshored jobs to the United States?"

The result was that 41% said they were considering doing so. The reasons given for bringing production back to the US were:

•Rising labor costs - Social unrest plus rising labor costs
Add to this falling labor costs in the USA and it makes even more sense.

•Supply chain complexities-Chains are getting "over stretched"
This is one thing most people don't understand. There is an entire science built around "just in time" inventory processing and materials movement. A small glitch in an offshore logistic plan can bring a factory to its knees. Everything gets shut down.

•Quality and value - QC is lacking and too big a time lag between decision making and production facilities
This is primarily a factor of US companies making product for US consumers, offshore. The management is constantly on airplanes to offshore factories to sort out problems and then getting back on an airplane to come back and report to US executives. It is much easier to manage a factory in Oklahoma from say Chicago than is is somewhere in outback Aisia.


•Changing demands-Production moving to smaller quantities and more flexibility are increasingly desirable
Sort of a combination of the above mentioned.

The survey does note that offshoring is still most effective place to produce when an industry primarily employs unskilled labor. Much of the work for the toy industry is indeed done with unskilled labor so though some jobs may be coming home, it would appear that China, at least for the toy industry, will continue to remain attractive at least for a while longer.

I'll say that even China is not going to be affordable for toys in the not too distant future. Many companies have offshored their offshore, sending product to even cheaper places like Malaysia and Vietnam.

http://www.giftsanddec.com/blog/Out_of_the_Toy_Box/42322-Are_Jobs_Coming_Home_.php
 
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lsmcknz
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« Reply #2 on: September 25, 2011, 10:10:57 AM » Reply with quote

One big advantage of off shoring is the cost. Companies can save a lot of money if they opt to off shore their after sales support. The entire business system invest outside to other countries who are willing to accept the job.
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Ron
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« Reply #3 on: September 25, 2011, 04:23:34 PM » Reply with quote

One big advantage of off shoring is the cost. Companies can save a lot of money if they opt to off shore their after sales support. The entire business system invest outside to other countries who are willing to accept the job.

As wages raise rapidly in China and wages fall rapidly in the USA it makes more sense to make your product where you sell it. That's what reshoring is mostly about. The cheap but labor intensive toys and so forthe will remain in China or where China wishes to go offshore (maylasia?) where labor is even cheaper. But we are actually beginning to de-globalize in manufacturing and make it where we sell it.
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