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Corporate Executive Survey Analysis: Media Trend of Onshoring Seems to be a Non-Issue for Most Corporations

The media trend of onshoring, however, seems to be a non-issue for most corporations participating in this survey. Despite the media coverage, 97 percent of the respondents do not expect to relocate a foreign facility back to the United States.

Larry Gigerich, Managing Director , Ginovus (Winter 2012)

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The 26th Annual Corporate Survey found the majority of responses coming from the durable goods manufacturing (29 percent) and distribution/logistics and warehousing (22 percent) industries. With this in mind, it should be no surprise that highway accessibility and labor costs topped the list of most important site selection factors. And, as the economy continues to tread along, companies are continuing to look for cost savings everywhere they can, including through lower operating expenses/labor costs.

Moving up on the list of site selection factors is the hotly contested issue of right-to-work. As I sit in my office overlooking downtown Indianapolis, the state of Indiana just voted to become the 23rd right-to-work state in the nation. This issue, as a site selection factor, jumped 9.6 percentage points, moving from 16th to 12th on the list, and is likely to be a trend companies and site selectors continue to monitor.

The media trend of onshoring, however, seems to be a non-issue for most corporations participating in this survey. Despite the media coverage, 97 percent of the respondents do not expect to relocate a foreign facility back to the United States. However, the survey does not determine how many of these companies have foreign facilities. In addition, 98 percent do not expect to relocate a domestic facility offshore either. Without further investigation, it is difficult to determine how many of the respondents to the survey have existing offshore facilities to even consider bringing them onshore.

Tied for second place on the list of site selection factors is availability of skilled labor, up from seventh place the prior year. Respondents say that high unemployment rates are not making it easier to find the labor their companies need (67 percent), and 43 percent say the unemployed are lacking both basic skills (reading comprehension and mathematical competency) and advanced skills (job-specific, technology-related, and specialized). Interestingly, training programs and proximity to technical college/training, as factors in the site selection process, rank near the bottom of the list - a 26-year trend.

Overall, the results are expected. Most corporations state economic instability (65 percent) as the top reason that they are not spending more of their earnings on investment in U.S. facilities. If they are relocating, high taxes are stated as the number-one reason behind the relocation, and the investment amount in new domestic facilities hovers under $10 million. With these corporations not confident that the economy will recover until 2014 (43 percent), it is presumable that we will continue to see actions that can result in the lowering of operating costs and labor costs, until something that resembles more traditional economic growth returns to the United States.

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About the Author

Larry Gigerich, Managing Director , Ginovus
Ginovus, headquartered in Indianapolis, is a leading provider of site selection, community comparative analysis, and economic development incentives procurement and management services to private-sector, educational, governmental, and not-for-profit organizations throughout North America. Ginovus is led by Larry Gigerich, a nationally recognized economic development leader with more than 20 years of local and state government, not-for-profit and private sector experience. Prior to founding Ginovus in 2002, Larry worked in a variety of economic development settings, including Deputy Director of Business Development for the Indiana Department of Commerce, Senior Advisor to the Mayor of the City of Indianapolis for Economic Development and Workforce Development and President of the Indianapolis Economic Development Corporation.

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