According to research by A.T. Kearney, leading reasons why companies are bringing their manufacturing back to North America include:
Shorter delivery time
Total cost of ownership
Reduced freight costs
Wage cost improvement
Improved customer responsiveness
Better innovation/product differentiation
As pointed out in Part 1, a key factor in making domestic manufacturing competitive is TCO - total cost of ownership.
Companies often make the decision to offshore based on ex-works price or landed cost and ignore, or under-appreciate, other cost factors that have a big impact on the bottom line.
"About 60 percent of OEM manufacturers decide on offshore versus reshore sourcing based on price, or other simple measures," says Harry Moser, founder and president of the Reshoring Initiative. "This typically results in a 20 to 30 percent miscalculation of actual offshoring costs."