When it comes to sourcing in terms of engineering, it’s interesting to watch the pendulum swing. Over the past decade, a lot of engineering work moved offshore. Either it was outsourced to companies that operated overseas or manufacturers moved their technical and R&D centers offshore. The trend lagged a little behind the movement to offshore manufacturing, but by and large it followed the same sort of pattern. Fast forward to today and the news is full of stories about reshoring: the movement of manufacturing back to domestic manufacturers. But what about engineering? Will there be a move back also? There’s some interesting data in the PriceWaterhouseCoopers CEO study that gives us a little insight.
The Where and Why of Future Sourcing
In that study there was a twofold question. First, it asked where CEOs planned to shift their sourcing in terms of countries. Second it asked for the main reason behind the shift. Note that the details also. The question asked which countries besides your own base of operations. Here are the results.
I found these results fascinating for a few reasons.
- The USA came in second overall the sourcing shift. That is 22% of all CEOs of non-USA based companies stated they intended to shift sourcing to USA based countries. Who would have thought for that companies outside the USA would look to source more work into the USA? This certainly is interesting in that it excludes any reshoring efforts of USA-based manufacturers that will look to move sourcing from offshore back into the USA. It would be interesting to take those numbers into account, but they were not published in the report.
- Innovation and quality played as much or more a driver behind the shift than cost did. There’s a similar story with Germany, another developed nation. Now innovation can be interpreted in lots of different ways. An organization can be innovative in how it manufactures products, how it manages quality into products, how it manages logistics and on and on. But some of the interviews of the CEOs behind the study talked about innovation in technology. To me that speaks to engineering.
Conclusions and Questions
What’s the bottom line? I think this is far from a set of definitive findings saying the reshoring of engineering in the USA has started. A much more focused study would need to be completed to get some insight into that. But I think it’s an interesting hint that it might be starting. And I do think the study shows that CEOs around the world do expect more innovation from the USA.
Time for you to weigh in. Have you started to see a shift towards reshoring engineering back to the USA at your companies? What is the logic behind any change you’ve seen? Would love to hear what folks have to say out there.
Take care. Talk soon. And thanks for reading.