US Companies Reshoring

It's not quite an exodus, but a number of US companies are moving manufacturing out of China and back to the US in a trend called "reshoring.' The reasons, according to a Fortune article, include reduced price differential as costs rise in China, local financial incentives win back factories, minimized shipping delays, elimination of communications problems, less travel, and above all, exchanging increasingly shoddy Chinese-made products for 'Made in USA' quality. According to a survey by Accenture, some 61% of manufacturing executives said they were considering re-shoring manufacturing and supply. A Boston Consulting Group report noted average Chinese wages were 52 cents per hour in 2000, but will rise to an estimated $4.41 per hour by 2015. IHS Global Insight noted shipping costs rose 71% because of higher oil prices, as well as due to cutbacks in ships and containers. Although labor-intensive manufacturing such as apparel will likely be kept in China or sent to even lower wage countries, the return of factory jobs, even if most of them are automated, bodes well for the US economy.