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Global Logistics Focus Sept.21, 2015

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16A THE JOURNAL OF COMMERCE SEPTEMBER 21.2015 SPECIAL REPORT GLOBAL LOGISTICS FOCUS 2015 In recent years, the advantages of offshoring have eroded, in large part because of rising wages, volatile fuel prices, concerns over security overseas and the 2008 global economic crisis. Not only are wages — and therefore the cost of manufacturing — on the rise in typical offshoring destinations such as China, but many manufacturers' consumers also expect products to arrive faster and in better shape than ever. "If you have an inland factory in China and something is bound for the U.S., you have to consider production, inbound transportation, port opera - tions, putting goods on the water, two to three weeks on the water, getting into the U.S., getting deconsolidated, getting put on rail, getting put on truck," Finley said. "That's four to six weeks to get to a point of consumption." Among North American respondents to AlixPartners' survey, 55 percent said the U.S. is the most attractive near- shoring destination, up from 42 percent last year. Mexico, long the near-shoring favorite, came in second at 31 percent, up from 28 percent last year but down from 49 percent just three years ago. Manufacturing in the U.S. has seen a steady gain in jobs since hitting a low of 11.45 million in February 2010, accord- ing to the U.S. Bureau of Labor Statistics. U.S. manufacturing employment in July was 12.4 million, up from 12.2 million in July 2014. Some studies, however, suggest, the near-sourcing job growth estimates have been overblown. While the ISM manu- facturing employment index registered 52.7 percent in July, 2.8 percentage points below the June reading of 55.5 per- cent, ref lecting growing employment levels from June, that reading isn't at the level that suggests a wave of near- sourcing. Millions of more jobs will have to be added to return job levels to those just 10 years ago. And, in fact, the U.S. continues to see a net drain on its manufacturing jobs year-over-year, according to the Manufacturers Alliance for Productiv- ity and Innovation. There's been an estimated 300,000 manufacturing jobs lost in the U.S. this year alone, according to a recent study from the MAPI Foundation. Improved second-quarter trade data for the sector has done little to stem the tide of a downward trend in the U.S., said Ernest Preeg, a MAPI Foundation senior adviser. "The U.S. $48 billion (trade) defi- cit increase in the first half of the year equates to a loss of 300,000 trade-related American manufacturing jobs, and the deficit is on track for a loss of 500,000 or more jobs for the calendar year," Preeg said in a statement. "This is the sixth con- secutive year of soaring trade deficits and very large job losses." Finley countered that the U.S. may not be seeing gains in heavy industrial manufacturing jobs, but that doesn't negate gains in other sectors of the industry such as foodstuffs or high-tech. "If you just take industrial manufactur- ing into account, the U.S. has not been able to retain a lot of that for simple mac- roeconomic reasons. Mexico is usually overwhelmingly more cost-competitive," he said. Further, job figures aren't always the best indicator of whether industry is coming or going, taking into account the rise of automation in many manufactur- ing facilities. Finley said he believes the recorded intentions of the senior-level executives polled in AlixPartners' latest survey will play out, especially in the wake of China's August decision to devalue the y uan. "Recent moves by China to devalue the yuan make already-com- plex manufacturing-sourcing decisions all the more complicated," he said in a statement. "These actions prove, as do what I'll call the nuanced results in our survey, that the world of manufac- turing and supply chains is a world of constant flux, and that in such a world there's no substitute for deep, strategic, case-by-case analysis and tight project management." That analysis is bringing more com- panies to North American, and U.S., shores, he said. JOC Contact Reynolds Hutchins at and follow him on Twitter: @Hutchins_JOC. JOB FIGURES AREN'T ALWAYS THE BEST INDICATOR OF WHETHER INDUSTRY IS COMING OR GOING, TAKING INTO ACCOUNT THE RISE OF AUTOMATION.

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