MANHASSET, N.Y. -- Electronics manufacturing operations with a total value of at least $2.5 billion are expected to be brought back to North America in the next three years with companies citing quality control as the primary reason for bringing operations back from overseas.
A study by the industry association IPC indicates that onshoring, North American manufacturers returning overseas operations to North America or building new operations in the region, continues to rise.
The study is based on a May 2012 survey of 229 companies with global revenues totaling more than $935.3 billion. One-quarter of operations that returned to North American since 2009 came from China, with other countries making up the other 75 percent.
Survey results showed that OEMs were largely responsible for operations returning to North America from overseas since 2009, accounting for more than 90 percent of the value and number of jobs brought back. The electronics manufacturing services (EMS) industry accounts for the largest share of overseas operations that participating companies plan to bring back to North America in the next three years.
OEMs’ new operations are a much larger share of future North American production than those by EMS.
Besides quality control being closer to customers is the driving force for companies establishing new operations in North America, the survey said. Click here for survey statistics.
IPC has 3,100 member companies mostly in PCB design, printed board manufacturing, electronics assembly and test.
It is even more encouraging for custom design houses who have watched customers take working designs "overseas" for first production, only to have customer complaints that were traceable to counterfeit parts and bad workmanship.
This is an encouraging report for those concerned about the flight of high-tech manufacturing from the U.S. But while it's good to know that some $2.5 billion worth of electronics manufacturing operations are coming back to North America, it's impossible to know how much manufacturing will be offshored during the three year period. In others words, it's possible that while $2.5 billion worth of manufacturing operations come back, $3 billion worth of operations could be shipped overseas in the same period. Nice to see some manufacturing coming back, but net-net the result could still be more is being offshored than on-shored. (For the record, I completely made up the $3 billion number for the purposes of illustrating the point- I have no idea what the real number will be).
Informative article. I work for McGladrey and there's a annual report on the State of Manufacturing on the website " http://bit.ly/IzVhuU " with insights from industry experts and information you may find iuseful.
The major factor of outsourcing the products manufacturing is the saving costs, but at the same time compromising on the quality and time/scheduling. If the workmanship has become affordable it is natural that it will stop encouraging outsourcing.