TUCSON, AZ -- A survey last year of some 80 C-level executives found that rising wages in Asian countries, rising fuel costs, and extended supply chain risks is making nearshoring is a real consideration for companies that sell into the US market. That survey is now the subject of a podcast by The Offshore Group that provides details related to the survey's structure and methodology and analyzes the findings.

According to Russell Dillon, a director at business consulting firm AlixPartners, which conducted the study, "Factors such as rising wages and volatility of fuel costs are prompting manufacturing executives to reassess the strategies that enable them to determine how to configure their global manufacturing footprints. As was the case in 2011, Mexico was chosen as the number one location in 2012 for nearshoring by the executives in our study sample. Given present economic conditions, the U.S. came up positive in the results as well."

Interested parties can listen to the near-shoring survey podcast, as well as view manufacturing executives' responses and results.

The AlixPartners survey revealed that Mexico has emerged as the top choice among companies considering relocating their already off-shored operations closer to home. Though security risks are a clear concern among respondents, relatively few have actually experienced supply chain disruption in Mexico. Moreover, executives appear moderately optimistic about the future of the country’s security problems; 50% expect at least modest improvement in safety and security issues.

According to the survey, 42% of respondents indicate they are currently near-shoring or will be within the next three years (Figure 1).

The top reasons cited include: lower freight costs, lower inventory (in-transit) costs, and improved speed-to-market. And, among those actively considering near-shoring, Mexico is by far the most attractive location, ranking considerably higher than any other country in the Americas (Figure 2).

Note: Most of Brazil’s manufacturing demand is consumed in Brazil, not exported for U.S. consumption.

Among those companies considering off-shoring current U.S. operations, Mexico (43%) is the number one choice , with China (30%) alone in second place.

Those surveyed cite safety and security as their primary concern with off-shoring, but only 19% have experienced supply-chain disruption in Mexico as a result of these issues. And fully half expect the situation in Mexico to improve over the next five years (figure 3), indicating that while safety and security in Mexico must be taken very seriously, many companies believe these risks can be mitigated effectively.

Despite security concerns in Mexico, the country appeals to manufacturers seeking to decrease supply chain costs and improve speed to market through near-shoring production that was previously off-shored. Mexico’s proximity to the North American market also means lower inventory costs, easier management coordination and improved cultural alignment with North American managers.

Footnotes: The AlixPartners survey polled 80 C-level and senior executives in international, manufacturing-oriented companies that sell into the U.S. market from more than 15 different industries. Polling took place between Jan. 25 and Apr. 4, 2011.

• Prev
• Next