U.S. Companies Reshoring Operations Back Home
American business executives are reconsidering their overseas operations and realizing that outsourcing may not be the best option.
Several factors are driving this sea change, from rising shipping and transportation costs to quality control issues to a desire among U.S. companies with overseas operations to do their part in rebuilding the hurting economy at home.
When given the choice, most U.S.-based companies that outsource overseas would choose to move operations back home if it made financial sense to do so. Once business leaders learn that there are U.S. locations with qualified and affordable labor, low taxes, and attractive economic incentives, they are often eager to explore their options to relocate back to the United States.
At Ecodev, we are seeing a number of small- to mid-sized manufacturers rethinking their overseas operations and questioning the financial incentives that lured them there in the first place. One Minnesota manufacturer that produces its products in China recently decided to move a production facility back to the United States. It expects an approximately 25 percent savings on the overall cost of each item due to cost savings of shipping and transportation. And California-based Seesmart LED, which makes light-emitting-diode (LED) light bulbs in China, is scouting U.S. production locations. Its executives say that when they consider all costs, the difference to produce its product in the United States is insignificant, and they would prefer to create jobs here.
For small- to mid-sized businesses with overseas operations, the time is right to examine overall operating expenses and determine if these facilities are financially viable, or if a return to the United States better suits long-term growth.
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