California automation company, Automation GT, is leading the way in automation options for companies bringing manufacturing from overseas back to the US.
Simon Grant, Automation GT’s CEO and President, says the re-shoring issue has become more prevalent in during early and mid-2012. Even though most of the industry has been aware of the trend, Grant says only recently has there been a “re-awakening” of the capital budgets among his company’s Fortune 100 customers. And while a post-Great Recession economy might give major corporations more flexibility in which to consider the prospect of bringing jobs back to America, it’s not the only reason to pursue the business case.
There are the typical reasons that a manufacturer considers re-shoring, which Grant says circle around “labor cost and conditions, compliance, intellectual property and time to market.” With labor costs in China rapidly rising, more companies are starting to realize that the total cost of ownership of a given product is not quite as compelling for the off-shore side. The total cost of ownership equation now includes time in freight, which can swing wildly due to delays and weather conditions. Add in unfavorable tax-and-duty situations, and the price outlook gets even worse.
There are currently many reasons why on-shoring is beneficial, but the proximity of production to consumers to better react to customer demands.
“In a time when consumer expectations for superior goods and services continue to grow, operating closer to the demand allows companies to reduce lead times and keep up with the market’s incessantly changing demands.”