Big manufacturers more likely to embrace "Made in USA": survey

UAW local 588 assembly workers move automobile parts around at the Ford Motor Company's Chicago Stamping facility in Chicago Heights, Illinois April 4, 2012.

NEW YORK (Reuters) - Large U.S. manufacturers are much more likely than their smaller peers to move production to the United States from China, according to a survey.

Labor costs and the quality of goods are the top reasons for companies to consider so-called "re-shoring," with some companies considering the United States a de facto low-cost country because of its high unemployment, according to the survey by the Boston Consulting Group.

It found that 37 percent of all U.S.-based manufacturing executives either plan to or are actively considering moving production from China. That rises to 48 percent among companies with more than $10 billion in revenues, the poll found.

Majorities of those polled said they expected wage costs in China to continue to rise, and said sourcing there is more costly than it appears on paper because of factors such as proximity to customers and the ease of doing business.

Makers of rubber and plastic products are especially likely to consider re-shoring. Companies that make computer equipment, metal products and transportation goods are less likely to do so.

"The economics of manufacturing are swinging in favor of the U.S.," said Harold Sirkin, a BCG senior partner and co-author of the study. BCG says a more competitive U.S. manufacturing base could create up to 3 million jobs by the end of the decade.

The poll of 106 U.S.-based manufacturers was conducted online in February.

REDEFINING LOW-COST

Large companies have more plants whose production can be moved and better access to financing, Sirkin said. Among recent examples of what he called an accelerating trend, Sirkin cited Ford Motor, NCR, MasterLock, SleekAudio, Chesapeake Bay Candle, and Farouk Systems.

The United States is becoming a low-cost developed-world country, according to BCG, with wages typically below those in Western Europe or Japan. More European and Japanese companies are likely to export from U.S. plants.

Some companies, including General Electric Co and Boeing Co, have said they went too far in moving operations out of the United States and that wage differences are narrowing. GE has moved much of its appliance manufacturing from Mexico and China to Kentucky.

Caterpillar Inc has shifted some production from Japan, picking a site in Georgia to build small tractors and excavators. The maker of heavy machinery is building or expanding 15 U.S. facilities, but it also expanding production in China.

The re-shoring trend could be slowed or reversed, BCG says, if, for example, the value of the U.S. dollar rises sharply. Others say rising investment in overseas plants suggests that re-shoring companies are exceptions.

U.S. manufacturing shed about 16 percent of its jobs, or 2 million, during the 2007-2009 recession, according to the Information Technology and Innovation Foundation, which has said a recent rebound in factory employment may not last.

Meanwhile, some 600,000 U.S. manufacturing jobs are going unfilled because of a dearth of skilled applicants, according to the Manufacturing Institute and Deloitte. A renewed focus on educating students in science, technology, engineering and math could address the shortfall, manufacturing executives say.

(Reporting by Nick Zieminski in New York; Editing by Gary Hill)