Archstone Study Shows New Job and Cost Reduction Opportunities Emerge as Manufacturers Contemplate Migration Back to the U.S.
Increasing Costs and Other Challenges Dampen Enthusiasm for Off-shore Manufacturing 

Archstone Consulting's study reports that companies are contemplating the re-establishment of manufacturing domestically, amid rising costs and other strategic challenges within the off-shoring model. As companies reassess their manufacturing and supply chain strategies for today’s global economic environment, the trend may create significant job opportunities in the U.S.

“For years, the concept of off-shoring, or moving production and/or sourcing operations to a
foreign country, has been the mantra of any supply chain manager looking to cut costs,” said
John Ferreira, Principal and Global Manufacturing Industry Practice Leader, Archstone
Consulting. “Now, amid volatile oil prices and an uncertain global economic future, this analysis
no longer is a certainty. Furthermore, companies that will commit to domestic manufacturing can
spur much-needed improvements in customer service, innovation and job creation – especially
when servicing the large domestic market.” 

A Wake-up Call for Manufacturers 
The Archstone study revealed that in the last three years, manufacturers have seen a significant
increase in costs related to off-shoring manufacturing for export purposes rather than in country
demand, which include: 

• Ocean freight costs have increased 135%, highlighting risks and cost volatility.
• The global commodity price index has risen by 27%.
• The Chinese Yuan has gained 18% in value compared to the U.S. dollar.
• Chinese manufacturing wages have risen by 44%.  

The True Cost of Off-shoring 
In addition to the rising costs of conducting business on a global basis, the study found several
soft cost issues, which affect the true cost of off-shoring, including: 

• Slower Cycle/Delivery Time  (59% of respondents) Reduced Supply Chain Flexibility and Responsiveness (56% of respondents)
• Lost Visibility, Coordination and Control Over the Supply Chain including Quality (50% of
  respondents) 
• Bottlenecks in Logistics Networks (e.g., ports, transportation) (50% of respondents) 

“The perceived 25-40% cost savings associated with off-shoring has previously been made
possible by low labor costs, cheap commodities and favorable exchange rates – factors that no
longer exist in today’s marketplace.” continued Mr. Ferreira.

A New Opportunity Emerges 
The study found that almost 90% of the companies surveyed are considering changing – or have
begun changing – their manufacturing and supply strategy and are being more and more selective
in making off-shoring decisions. U.S. manufacturers have become increasingly aware of the need
for a more sophisticated total cost model that considers factors such as supplier price and terms,
delivery costs, operations and quality costs, customer-centric supply capabilities and other
situational costs that arise.  

“Manufacturers who approach sourcing decisions with a holistic perspective – evaluating market
and customer demands and competitive strategy against a comprehensive knowledge of total cost
– will likely increase revenue and lower costs, giving U.S. companies a powerful competitive
advantage,” concluded Mr. Ferreira.  

About the Study 
Archstone Consulting surveyed 39 senior executives from U.S. and European-based
manufacturers, primarily from consumer goods and electronic industries, to assess the evolving
footprint of global manufacturing and supply networks.

Read more about the findings by requesting a summary of the study results. Please take a moment to complete the form in the link below to receive your complimentary copy.