Global competitive conditions driving the manufacturing location decision

• Published in: Business horizons Vol. 57; no. 3; pp. 381 - 390
• Main Authors: Tate, Wendy L., Ellram, Lisa M., Schoenherr, Tobias, Petersen, Kenneth J.
• Format: Journal Article
• Language: English
• Published: Greenwich Elsevier Inc 01-05-2014; Elsevier Science Ltd
• Subjects: Decision analysis; Factor market rivalry; Location analysis; Manufacturers; Manufacturing; Manufacturing location decision; Offshore; Offshoring; Outsourcing; Relocation of industry; Reshoring; Studies; United States > US; Manufacturing location decision; Factor market rivalry; Offshoring; Reshoring
• ISSN: 0007-6813; 1873-6068
• DOI: 10.1016/j.bushor.2013.12.010

Given today's rapidly shifting global competitive conditions—including customer location, natural disasters, currency valuation, labor and transportation costs and availability—many U.S. companies are revisiting decisions about their preferred manufacturing location(s). The purpose of this research is to understand some of the trends that affect whether U.S.-based companies bring their production back to the United States or relocate it to different geographical locations (reshore). The focus is on the key factors that affect companies’ manufacturing location decisions, the importance of these factors, and how the importance has changed over time. Because of the complexity involved in the manufacturing location decision, key risk factors inherent in the manufacturing decision are also assessed. Survey responses from 319 companies that currently manage offshore manufacturing plants are analyzed. Among other insights, this study found that 40% of these companies perceived a trend toward reshoring to the U.S. in their industries. The companies involved in this study also place an increasing importance on where their customers want them to locate, as well as how the location could help expand into new customer markets. These and further results and implications for U.S. manufacturing companies are presented herein.