Subscribe
Close
  • Free for qualified executives and consultants to industry

  • Receive quarterly issues of Area Development Magazine and special market report and directory issues

Renew

Automotive In-Sourcing: A Long-Term North American Trend?

Automotive Site Guide 2012
Figure 3: The auto industry, if not explicitly endorsing “in-sourcing,” has supported the movement with almost $14 billion in new capital investments. Of the 15 largest projects receiving a CICI Award for Corporate Investment in 2011, eight projects were related to the auto industry.
Figure 3: The auto industry, if not explicitly endorsing “in-sourcing,” has supported the movement with almost $14 billion in new capital investments. Of the 15 largest projects receiving a CICI Award for Corporate Investment in 2011, eight projects were related to the auto industry.
(page 2 of 2)
Making a Site Selection
All of this talk about in-sourcing can better inform future site selection activity. When deciding where to locate new facilities, companies should consider three things:

  • 1. If companies are willing to repatriate projects where labor content is less than 25 percent of the total manufacturing costs, and if labor productivity is key to their competitiveness, then they should look at states and local communities with a highly skilled work force capable of handling their jobs. In addition, states that encourage flexibility in their work rules will foster companies' productivity.

  • 2. To enhance the productivity of workers, companies are investing large sums in capital-intensive equipment. They should look for states and local communities that reward these investments by lowering property taxes associated with personal property. Remember the economic axiom: "If you tax something, you receive less of it."

  • 3. Since the goods that will be manufactured in the United States have lower labor content but relatively higher logistics costs (i.e., steel, aluminum, and plastics), efficient and reliable infrastructure is critical. One of the reasons that Toyota, Honda, and Ford are investing in the United States is that their production in Thailand was shut down for an extended period of time because the floods disrupted both their supply chain and their actual production operations. Good freeway access, efficient rail yards (with dual access to multiple carriers), and a port with efficient and predictable labor relations are essential to efficient management of logistics costs.


It's an exciting time again in the automotive industry. For all of those who bled during the dark days of 2009 and 2010, it's especially nice to hear what one might describe as a louder sucking sound right here at home.
Article Discussion
U.S. Manufacturers Attempting to Upskill Their Workforces
Geraldine Gambale, Area Development Magazine
Developing Loyalty Among a Millennial Workforce
Geraldine Gambale, Area Development Magazine
Technological Innovation Essential to U.S. Manufacturing Growth
Geraldine Gambale, Area Development Magazine
Which Countries Have Lowest Business Costs?
Geraldine Gambale, Area Development Magazine
Ideas for Industry Innovation Ecosystems Put Into Play
Craig Giffi, Deloitte LLP
Michelle Drew Rodriguez, Deloitte Services LP
All Studies/Research/Papers

Follow Area Development

Share