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Home » Survey finds solid interest in near-shoring close to U.S.
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Survey finds solid interest in near-shoring close to U.S.

April 25, 2011
Mark B. Solomon
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A survey of 80 top U.S. executives whose companies have off-shored their production beyond North America found that 42 percent of them have either taken steps to "near-shore" their operations closer to the United States or plan to do so within the next three years.

The survey, conducted by Alix Partners LLP, a New York-based global business advisory firm, found that Mexico would be the most likely destination for such near-shoring efforts.

According to the survey, 9 percent of executives whose companies have manufacturing operations in Asia or China are in the process of returning them to North America or have already brought operations closer to home. An additional 33 percent said they would begin a similar process within the next one to three years.

About 54 percent of respondents said near-shoring was "not a consideration" at this time, according to the survey.

Of those respondents who are considering near-shoring, 63 percent said Mexico would be the most attractive locale. Mexico's proximity to the U.S. market, an improving transport infrastructure, and relatively modest currency fluctuations against the U.S. dollar were seen as important factors in the respondents' decisions, especially as the benefits of producing in Asia and the Indian sub-continent are offset by rising oil prices, which have driven up shipping costs, the survey found.

While security issues in Mexico were seen as a potential impediment to either relocating or expanding production there, only 19 percent of those surveyed have experienced supply chain disruptions in Mexico due to security problems, the survey found.

By contrast, only 19 percent of the executives surveyed said they would re-source foreign operations to the United States.

Foster Finley, managing director of Alix and head of the firm's logistics & distribution practice, said he was surprised by the number of respondents who had either already near-shored closer to the U.S. market or planned to do so. "That percentage was higher than we expected," he said.

The survey also found that 37 percent of executives polled have already taken their U.S. manufacturing off-shore, while 27 percent expect to do so in the next three years. Mexico would also be the most attractive destination for those who have off-shored from the United States or who plan to do so by 2014.

Finley said virtually all of the data was collected and analyzed during the early part of 2011, before the March 11 earthquake and tsunami in Japan that killed more than 14,000 people and disrupted global supply chain operations. Finley said that conversations with executives led him to conclude that natural disasters, while tragic and dislocating, do not influence decisions on production venue as much as everyday concerns such as shipping and inventory costs, and proximity to end markets.

Fuel costs, on the other hand, were seen as a major consideration even during the data collection period that occurred before the significant run-up in oil prices over the past six to eight weeks, Finley said.

Supply Chain Services
KEYWORDS AlixPartners Ltd.
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Marksolomon
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.

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