Reshoring Of Production and Engineering Is Not Yet Much Of A Trend In U.S. Electronics Sector
By Richard A. McCormack
Reshoring of electronics industry production back to North America is not a big trend, according to a survey by IPC - Association Connecting Electronics Industries. Over the past 15 years, high-volume electronics production left the United States, and "most of it is not expected to return," says IPC in a study on the issue. Companies are beginning to reconsider their overseas cost structures, "but only a few have taken action."
In a follow up survey to one it conducted in 2013 of electronics companies that said they are reshoring production from Asia (mostly China) to the United States and Mexico, IPC found that "while many executives are interested in on-shoring and assessing its potential for their own companies, few companies to date have taken action," according to its study. "On-shoring is still a relatively rare phenomenon."
When IPC asked 100 companies in 2013 if they were considering bringing production back to the Untied States and Mexico, 16 companies said that they were doing so. These OEMs, printed circuit board manufacturers, materials suppliers, electronic manufacturing service firms and an equipment supplier were asked this year to provide more information about their reshoring experience. "While data from this small sample is not statistically significant, it offers preliminary indications on how on-shoring has affected the companies that have adopted this strategy," says Sharon Starr, IPC director of market research.
The total investment made by those companies through 2013 was $200 million (creating total of 666 new jobs). That investment represented about 5 percent of the companies' total value. Through 2014, nine companies indicated they would be reshoring production back to North America, with a total investment valued at $136 million, "just under 1 percent of the companies' global value," according to the IPC follow-up survey.
Of the 10 companies that did return production to North America, half experienced an increase in production costs, but "more striking is that the other half saw no change in production costs," notes IPC. Shipping costs, management costs and inventory costs declined for most of the companies that returned; on-time delivery and time-to-market improved for most as well. Two of the 10 companies experienced an increase in sales.
There are still deterrents to reshoring: higher costs of U.S. manufacturing, taxes and regulations, the shift of markets overseas and the lack of suppliers.
IPC's study, "On-Shoring in the North American Electronics Industry: 2014 Update on Trends and the Impacts on Companies," is available for association members for $225 and for nonmembers for $450.
For more information or to purchase the report, visit www.ipc.org/on-shoring2014.
Provide us with a comment on this article.
We'll notify you as issues and free stories like this one appear on this site. Sign up for a content-rich, e-mail newsletter. (You will NEVER receive spam.)
Please consider subscribing to Manufacturing & Technology News. You will have access to all back issues dating to 1998, plus receive the current issue electronically and via regular mail. It is all original reporting on the most important stories facing U.S. industry. No advertising. The cost of a new subscription is $495 per year.
Scan Back Issues Comments | About Us | How To Order
Reproduction Rights 2014 Are Granted To This Story So Long As A Link Is Provided To This Source Of Original Content.