Panjiva report gauges temperature of current state of U.S. manufacturing
September 16, 2013 - LM Editorial
While United States-based manufacturing appears to have regained some momentum in recent months following an erratic stretch earlier in the year, a recent report from Panjiva, an online search engine with detailed information on global suppliers and manufacturers, issued a report to see if there is more than meets the eye when gauging the current state of domestic manufacturing.
The report, entitled “Manufacturing in the U.S.—Movement or Myth,” surveyed more than 150 sourcing professionals to see what their take was in regards to factors impacting decisions made by companies to source goods from United States-based manufacturers.
Some of the report’s key findings include:
-the majority (75 percent) of buyers currently source goods from the United States;
-more than a third of buyers (36 percent) anticipate a decline or stagnant activity when asked to assess the long-term outlook for manufacturing in the United States;
-only 4 percent of buyers cited concern about working conditions at factories outside the United States as a driver of efforts to increase the amount of goods sourced from the United States—a surprise given the seeming outrage following recent, deadly disasters at factories in Bangladesh, noted Panjiva;
-81 percent cited a single factor limiting how much their company sources from the U.S., with high costs topping the list; and
-29 percent cited higher visibility into the capabilities of American manufacturers and suppliers as a factor that would increase their likelihood to source from the U.S. in the future
Panjiva also explained in the report that the United States’ greatest strength is its short turnaround time, but costs are still the key driver of decision making and the United States is not perceived as competitive on that front.
“What is potentially challenging about this, is not a lot can be done about those two things, with a good amount of that due to higher labor costs in the U.S.,” said Panjiva CEO Josh Green. “The reaction to that combination is instead to focus on U.S. strengths. We are not going to win on costs so let’s really emphasize the rapid response manufacturing has and where America is really differentiating itself.”
In the report, Panjiva explained there was not a clear consensus about whether consumers will pay more for American-made goods, with 52 percent of respondents saying they will pay considerately or slightly more. And it added that it suggests that consumers’ willingness to spend more on Made in America products could translate into heightened interest from buyers in U.S. sourcing.
“The evidence on that is pretty mixed,” said Green. “It certainly suggests it could help drive manufacturing back, if that is, in fact, the case.”
While some large companies have set up manufacturing operations in the U.S., Green said that by no means makes it a full-on trend. Instead, he labeled that activity as isolated cases that represent good news but are not reflective of a broader resurgence in U.S. manufacturing just yet.
“We are likely to see some manufacturing growth in selected areas of manufacturing, but based on the report there is very little belief that we will see a broad-based resurgence in U.S. manufacturing,” said Green.
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