Moves to reshore signal a gradual return to 'Made in US'

Many American companies are finding that manufacturing in China is no longer the best option.

For 74 years, Miller Manufacturing Co in Eagan, Minnesota, made farm, ranch and pet products distributed in the United States, Canada and other countries.

Like other US-based manufacturers, Miller had suppliers in China making products such as the company's Chow Tower automatic dog feeder. In 2013, after seeing a sharp increase in shipping and labor costs in China, Chief Executive Officer Dan Ferrise decided to have the dog feeders molded at a plant in Minnesota. The move marked Ferrise's slow turn away from China back to the US.

Ferrise is not alone. After years of vacating the US for lower-cost China, manufacturers are reshoring－bringing production back to the US.

While not a tidal wave, it is a discernible trend. Management consultant A.T. Kearney said in 2013 there were 210 reshoring cases, and it estimated there would be about 300 for 2014. In 2010, there were 16.

"Even though there is no torrent of renewed manufacturing activity moving the needle just yet, it's clear that the reshoring movement is growing. At the very least, it should make US companies think twice about where they will manufacture their products in the next few years," Kearney said last year in a report titled Solving the Reshoring Dilemma.

"Back in 2010, we projected that it (reshoring) wouldn't really get started until 2015. That's because it takes time for a company to consider all of the factors on where to locate a plant. Our estimate is that reshoring will bring around 2.5 million to 5 million jobs to the US over the next five-plus years," said Hal Sirkin, senior partner and managing director of The Boston Consulting Group and a professor at Northwestern University's Kellogg School of Management.

In its third annual online survey of senior-level US executives from companies with at least $1 billion in yearly revenue, Boston Consulting found last year that more than half of the 252 respondents were considering reshoring.

But US companies will not abandon China and its manufacturing sector completely.

Harry Moser, founder and president of the Reshoring Initiative, an industry-funded nonprofit organization, said that the US is now more competitive with China in manufacturing.

"The US is competitive for products that are sold in the US, but not competitive for products sold in China or Asia. US labor costs are still (four to five times higher) than in China, but US productivity is higher, which makes up a lot of the labor difference," he said.