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Cook Associates, Inc. is a retained Executive Search and M&A Advisory Services firm. Our core business is creating value at the intersection where talent and opportunity connect, and we are uniquely positioned to help our clients capitalize on the brightest talent and best performing companies in the marketplace. Our client base ranges from multinational corporations to early stage entrepreneurial companies, private equity and venture capital firms. Brand name clients include American Express, The Blackstone Group, Canon, GTCR, Juniper Networks, Johnson & Johnson, Novartis, Levi Strauss & Co., Pitney Bowes, and SiriusXM Satellite Radio. 


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SURVEY: 85% of manufacturing executives

Rising Labor Costs and Quality Concerns Have Companies

Reevaluating Overseas Strategies

 

CHICAGO – December 15, 2011 – According to a survey conducted by Cook Associates Executive Search (www.cookassociates.com/executive-search), a leader in retained executive search, 85 percent of manufacturing executives see the possibility of  certain manufacturing operations returning to the U.S., with 37 percent citing overseas costs as the major factor. Nineteen percent cited logistics and 36 percent stipulated other reasons, including economic/political issues, quality and safety concerns, patriotism and overseas skills shortages for highly technical manufacturing processes.

Cook Associates Executive Search polled nearly 3,000 manufacturing executives primarily in small- to mid-sized U.S. companies from October 13 through November 18, 2011. Participants consisted of C-level executives (CEO, CFO, COO) and key functional Vice Presidents (Operations, Manufacturing, Supply Chain).The survey data was supplemented by written comments submitted by individual executives.

The survey identified low-volume, high-precision, high-mix operations, automated manufacturing and engineered products requiring technology improvements or innovation as the primary forms of manufacturing returning to the States. “With increased manufacturing here in the U.S., we would expect increasing demand for engineering, product development, operations and finance positions,” says Kevin Logterman, Managing Director, Industrial and Family Business for Cook. “We’ll also see demand increase for finance/accounting specialists (CFOs, Controllers) who understand overseas operations and are able to calculate the true costs for exporting since they are difficult to quantify.”

Logterman commented, “The executives we polled told us that wage inflation in traditional overseas venues, especially China, is changing the value proposition for American manufacturers. Once, costs were the primary driver for moving manufacturing offshore, but now companies are doing the math and thinking more about staying at home. Also, executives told us that because logistics are complex to begin with, the financial argument has to be compelling and the dynamics are changing.

“In order to stay competitive in a slow economy, respondents are focusing more on quality and customer service as differentiators, both of which are better managed domestically. They also said that skill sets for certain manufacturing functions are not readily available overseas -- China and Asia generally are unable to meet the demand for skilled workers. Finally, patriotism was cited as a factor as executives looked for a return to a ‘Made in America’ mentality in the U.S.”

About Cook Associates Executive Search

Founded by executive search pioneer Ruth Cook in 1961, Cook Associates Executive Search has thrived for more than 50 years because of its commitment to securing executive-level talent to drive corporate performance for clients. We specialize in recruiting key contributors that range from independent board directors to CEOs to functional VPs and other executives. Within their respective industries, our clients are innovators that span the gamut from Fortune 100 to early-stage companies, including publicly traded, family owned, private equity and venture capital backed companies.  For more information, visit www.cookassociates.com/executive-search.

Comments

The survey’s conclusions are entirely consistent with Boston Consulting Group’s recent report: Chinese net unit manufacturing costs are converging on U.S. costs for products to be sold in the U.S. For the economic trends to have a rapid impact on the behavior of major U.S. companies, however, the companies will have to calculate their total cost of offshoring: the logistics and other costs cited by 73% of the respondents. 
 
To help these companies make better sourcing decisions the non-profit Reshoring Initiative,www.reshorenow.org, provides for free a Total Cost of Ownership (TCO) software that helps them calculate the real offshoring impact on their P&L. With clear evidence of the fragility of global supply chains, Chinese and other LLCC (Low Labor Cost Country) wages rising rapidly, the U.S. $ declining and oil soaring, this is the perfect time for U.S. companies to reevaluate their offshoring strategies and bring some of the sourcing home.  
 
Readers can bring back some manufacturing by asking their companies to reevaluate offshoring decisions. Suppliers can use the TCO software to convince their customers to reshore.  
 
You can reach me at harry.moser@comcast.net. 
 
Posted @ Sunday, December 18, 2011 9:33 AM by Harry Moser
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