Businessweek‘s (Feb.8,2012) headline reads: “For Some US Manufacturers, Time to Head Home”. It 
When measured on price alone, says the Reshoring Initiative, the cost of products and components made in the US vs. China are 108% higher. But when total cost of ownership is included, the US averages only 12% higher. “The US is a lot more competitive than people realize,” says the group’s founder. “Over the last several years, firms got caught up in the outsourcing trend without thinking through the costs.”
Two of the factors that drove firms overseas, cheap fuel and labor, no longer favor far-flung ventures. A barrel of oil has jumped from $23 to $88 in the past decade, so the price of shipping goods has gone up. And wages in China have increased 15% a year in that same time frame. Further, the dollar has declined 23% since 2002, with the result that factory labor here is 11% cheaper in dollar terms over that period.
As companies have also gotten better at reducing inventory and adopting JIT delivery, supply chains that stretch around the world have started to look like liabilities. Researchers at Gartner predict that by 2014, 20% of the goods made in Asia that are destined for the US will shift to the Americas. And a recent survey by Accenture, called “Manufacturing’s Secret Shift,” reports that 61% of 287 manufacturers are thinking of moving operations closer to customers.
Don’t expect a hiring frenzy if some factories return, though. “It’s a marginal improvement, not a tidal wave,” says Businessweek.
Discussion questions:
1. Why won’t a shift in manufacturing result in millions of new jobs?
2. Why should the total cost of ownership be included in outsourcing decisions?