Resource 2: Product Selection

“About 25% of offshored products should be profitably reshorable.”

Based on available data, about 25% of offshored products should be profitably reshorable. Since the reevaluation will take some effort, where do you start? Which products/components are most likely to be in that 25%? Here are some resources for this first sort.

• BCG’s Seven Tipping Point Industries which now should be more profitably supplied to the U.S. market from the Southeastern U.S. and Texas, than from China
• Booz & Co. (now part of PwC) chart showing cost competitiveness of U.S. industries vs. Chinese imports. The data is from 2009. We estimate that U.S. production should be 10 to 15 percentage points more competitive than shown, due to 6 years of approximately 15% annual USD wage increases in China.
• Reshoring Initiative data (pages 4 to 6) on the mix of reshoring and FDI by industry.
• Reshoring Initiative 96 slides showing consumer products cases of reshoring, kept from offshoring or FDI.
• Products that will take best advantage of consumer preference for Made in USA products. Especially: products for infants or that might have other risks, products intended for the affluent, older, Midwesterners. Our data shows that having a Made in USA brand was a reason in about 15% of all reshoring cases.
• Product characteristics: large or heavy relative to labor content; volatile demand including seasonality; frequent design changes; IP risk; product safety issues; natural gas or energy intense; well suited to automation; subject to intense regulation; fragile; no Made in USA competition yet.

• Products where you are experiencing pain: delivery; quality; too much inventory; travel; IP risks; missing the sweet spot for consumer preference for Made in USA; costs rising; long launch times; difficult coordination of engineering and manufacturing; or are at risk to lose share to a U.S. manufactured product.
• Products where U.S. manufacturing cost/purchase price is maximum about 35% above the Asian ex-works cost/price.