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Corporate Executive Survey Commentary: No Mass Reshoring Trend

Although rising offshore costs are causing companies to choose U.S. over foreign locations for new investment, this has yet to result in a mass reshoring trend.

Q1 2014
The results of the 2013 Corporate Survey reflect many of the market trends observed over the last 12 months by Site Selection Group. Most importantly, the United States has enjoyed an increase in corporate investment, and most corporate executives are optimistic about the continued economic recovery.

The survey, as well as SSG’s experience, suggests that the majority of new projects are driven by an increase in demand for goods and services. Another common trend is that corporate projects, especially in the production and material-moving sectors, continue to become more capital-intensive and less labor-intensive.

These results help clarify a common misconception that new corporate investment in the U.S. by companies with a foreign presence is the “reshoring” of existing foreign operations. It is SSG’s experience that the rise in offshore costs is causing companies to choose the U.S. for new investment over foreign locations, but those costs haven’t risen to thresholds that have sparked a mass reshoring trend. However, this reshoring trend could become reality if cost structures keep increasing in the current fashion, but it is unclear when that would happen.

Regarding key location drivers, the availability of a qualified, productive, yet cost-effective work force will continue to be the most important factor when locating corporate investment. In addition to labor, most decision-makers will place a high priority on business environment factors that will have the greatest long-term impact on their operation, and will only use economic incentives to draw fine distinctions between short-list communities that can adequately support their business.

By all accounts, most industries will continue to experience positive growth over the next couple of years, and it will be interesting to see the opportunities that arise.

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