It’s been the big story in manufacturing for more than a decade: companies are sending plants offshore to take advantage of inexpensive labor. But according to Exel Logistics, the advantages of manufacturing overseas have waned over the last few years. Will U.S. companies begin to bring manufacturing operations home, faced with increasing burdens and decreasing ROI on their overseas facilities?

The big reason? Labor cost reductions. Since 2003, wages have increased by 21% in Brazil and 19% in China compared with just 5% in Mexico and 3% in the U.S. Manufacturing labor is still much higher in the U.S., but the gap is closing. And there have always been other reasons to manufacture here, including lower inventory costs, reduced lead times, better customer service, faster recovery time after supply chain disruptions, and reduced carbon footprint.

Competitive advantage can be gained by, as Exel states in the paper, “bringing operations back to, or near to, the United States.”

Exel’s new white paper evaluates Right-Shoring and what it can mean for domestic businesses. Download the report here.

Tags: Manufacturing, rightshoring, Supply Chain

Scott Stone is Cisco-Eagle's Advertising and E-business Manager. He is a 20-year veteran of the material handling industry. He publishes the award-winning Material Handling Tips & Information Newsletter and works on all aspects of the company's communications efforts. See Cisco-Eagle on Twitter