Kevin and Bill have written eloquently and often about the hidden costs and perils of outsourcing manufacturing. Now Booz & Company has joined this (very small) chorus and published an article on the benefits of "backshoring." (It wouldn't be a legitimate consulting firm article unless there was some new jargon in the title.)
As Kevin has written about before, higher transportation costs, rising wages, and higher raw materials prices in China have eroded the obvious cost advantages that seduced companies overseas in the first place. Better control over intellectual property is another big factor companies are considering.
But now there's a whole raft of new reasons for the return of manufacturing to the US that have nothing to do with cost. In The Case For Backshoring, NCR is cited as a company that's coming home. For years, the company had outsourced production of its ATMs to Flextronics factories in Asia and Brazil.
What's most interesting in this story is that simple manufacturing cost wasn't the primary driver in the decision to bring manufacturing back to the US. NCR sees domestic manufacturing as key to increasing sales as well. It enables them to make higher value-added products that their customers want.
And in a painful echo of Boeing's ongoing Dreamliner nightmare,
It's a hopeful sign that a consulting company has published this article, as they were often the biggest cheerleaders for outsourcing in the first place. (Lego, anyone?) But now we're reading about Innovation. Time to market. Increased sales. Better products for customers. Gosh, what reason will they come up with next?