Some of the most interesting findings in the Center for National Policy survey on offshore manufacturing involve the reasons why American companies decide to build products overseas.
While the most common stereotypes have American companies shifting production offshore because of cost advantages, particularly for labor, the survey found other reasons to be more important to the 200 top manufacturing executives interviewed by Peter D. Hart Research Associates Inc. for the study.
By far the principal advantage of overseas manufacturing, according to executives of companies with overseas plants, is the ability to get closer to the markets in which the products are being sold.
Labor costs rank second as a determining factor, tied with other manufacturing costs. Product quality also ranks high.
"The most intriguing finding is that for offshore producers, labor costs are not the motivating force in locating abroad," the study said.
However, the survey also found that U.S. manufacturers with no foreign operations believe labor costs are the best reason for going abroad.
"U.S.-only manufacturers seem to have much more of a traditional manufacturers' mindset, as they are strongly oriented toward the variety of manufacturing inputs and closely attuned to labor costs as well as government/taxation factors," the report said.
"Offshore producers are much more market-oriented and sales conscious," it said.
"There are two separate worlds out there: those people who have operated offshore and those people who haven't," Hart said in an interview. "If you go there for labor costs, you're going to get fooled."
Advocates of U.S. manufacturing hope the results of the survey can be used to help persuade domestic manufacturers not to look beyond American shores in making decisions on where to locate new plants.
"I think it shows that some of our preconceived notions are not accurate," said Rep. Buddy McKay (D-Fla.), a co-chairman of the bipartisan Congressional Competitiveness Caucus.
"If we can get the accurate picture out, there is a real opportunity to have manufacturers take another look before they decide to move overseas," he said.