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More Electronics Manufacturing Expected to Return to North America

18 October 2013

More electronics companies plan to return manufacturing back to North America from China, according to a new study by the Association Connecting Electronics Industries, a trade group that goes by the acronym IPC.

The report said 14 percent of the companies surveyed indicated that they planned to bring existing operations back or build new operations in North America from mid-2013 through the end of 2014. The majority of these companies are OEMs and most of the planned operations are manufacturing facilities.

Ninety-two companies with combined sales of $50 billion responded to the survey. The companies included OEMs, electronics manufacturing services (EMS) providers, printed circuit board fabricators and suppliers of materials and equipment, IPC said.

The study also found that 16 percent of the responding companies moved operations to North America from overseas since the beginning of 2012. Based on the value of the operations and number of jobs created, EMS companies were responsible for the bulk of the operations returned to North America. Most of these operations were moved from China to the United States, and a few moved to Mexico, according to the study.

The types of products that moved back to North America included communications equipment for IT applications, high-value consumer products and universal power adapters, according to Sharon Starr, director of market research for IPC.

The high cost of transportation was cited by 75 percent of the companies as the major driver for returning manufacturing operations to North America, said Starr. If a company is selling a product into the North America market and the company has "a need for a fast turnaround or the product is big, transportation is an issue," she said. "Fuel prices have been rising" so transportation costs are higher, Starr noted.

Sixty percent of respondents also cited quality control concerns, the need to be close to customers, and management costs as major drivers. Other factors included quality of available labor, protection of intellectual property, cost of manufacturing and International Traffic in Arms Regulation requirements.

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