The offshoring issue
The long-standing industrial practice of outsourcing manufacturing operations to low-cost parts of the world in order to keep manufacturing costs down has recently taken a dramatic turn. With rapidly rising labor costs in traditionally low-cost countries such as China, manufacturers are now experiencing that the financial advantages of manufacturing overseas are being seriously eroded.
When they also realize that offshoring also usually involves complex logistics, added shipping times, and difficulties in reacting quickly and nimbly to changes in customer requirements, there are clear reasons why many manufacturers should be looking for new ways to reduce manufacturing costs and increase productivity.
The automation answer
Automation using cost-effective, advanced robotics technologies is helping this shift by enabling companies of all sizes to remain cost-competitive while keeping their manufacturing operations at home.
A report from Boston Consulting Group has shown that “the share of executives saying that their companies are actively reshoring production increased by 9% since 2014 and by about 250% since 2012. This suggests that companies that were considering reshoring in the past three years are now taking action.”
56% of the survey’s respondents believe that decreasing costs of automation have improved their product competitiveness, and 71% believe that advanced manufacturing technologies will improve the economics of localized production. Nearly three-quarters (72%) said they will invest in additional automation or advanced manufacturing technologies in the next five years.
Interestingly, this increase in automation is not expected to have a negative impact on employment. The report shows that 50% of respondents anticipate net manufacturing job creation during the next five years, with 74% citing access to a skilled workforce as a strong factor for moving production back to their home market – in this case, U.S.A.