Good news for U.S. logistics providers
May 29, 2012 - LM Editorial
As noted in today’s news, a recent study issued by The Hackett Group found that the shrinking total landed cost gap could create a tipping point resulting in an acceleration of reshoring. This should resonate well with the nation’s logistics providers.
According to published reports, many large companies have made public plans to reshore portions of their manufacturing to the U.S. over the past two years, including Caterpillar, Nissan, NCR, Yamaha, Ford, and Electrolux. Earlier this year, both Boeing and GE said they were committed to moving parts of their offshore manufacturing capabilities back to the U.S.
Another significant finding from The Hackett Group study is the increased movement of lower-value manufacturing from China to other developing economies as companies under margin pressure search for lower wage rates outside of China. Countries including India, Thailand, Vietnam, and Brazil continue to successfully grow their share of global manufacturing as they become more cost effective countries for manufacturing.
“The cost increases in China are impossible for companies to ignore,” said The Hackett Group Chief Research Officer Michel Janssen. “As Chinese wage rates rise, companies are looking to maintain their competitive edge by either bringing that production closer to developed markets, moving it to lower wage countries, or increasing productivity in China.”
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