Darrel Baker

As noted in my last post, the trend to re-shore manufacturing in the U.S. seems to be growing, so early this summer the Stilwell Baker team created a survey to learn more about companies that engineer, design, and manufacture electronic products. Within the limits of the survey, the Stilwell Baker – Electronic Product Design and Manufacturing Survey Results validated the current buzz on the importance of U.S. manufacturing to American companies.

The respondents to the survey were a fair representation of market segments within our current customer base, with Technology as the most prominent industry segment, followed by Consumer Goods, Aerospace, and Industrial Goods. Less represented, though important to the reasoning in our analysis, were Government/Military, Automotive, Medical Device, Utilities, and Oil and Gas market segments.

Nearly 63% of respondents stated that it was important or crucial to their companies that electronic products were designed and manufactured in the United States, and this supports the argument that the advantages of off-shore design and manufacturing are significantly eroding. The location of the market a company serves is much more likely to be the key driver for cost-effective manufacturing going forward. It’s a welcome trend for companies like Stilwell Baker, which have a standing commitment to U.S. production.

At Stilwell Baker, we see evidence that re-shoring is gaining momentum. Companies are approaching us for redesign of electronic products that they originally outsourced to Asian suppliers—products fraught with problems. Consequently, our clients are much more responsive to end-to-end design and manufacturing in the United States than they have been in the last 10 years.

We’re hearing about the risks OEMs are no longer willing to take: loss of intellectual property rights, poor communication that leads to program delays, and the business implications of quality and reliability issues in finished electronic products. The explanations we’re getting are similar to those identified in MIT lecturer David Meeker’s 2011 cautionary case study, “Outsourcing to China” where he sites corporate underestimation of 6 risks specifically associated with outsourcing manufacturing to China.

But outsourcing doesn’t have to be a dirty word. In our survey, 62% of respondents said their companies outsourced activities in electronic product development and manufacturing, and 92% were at least partially satisfied with the results. This group also reported that outsourcing electronic and mechanical engineering as well as circuit design, firmware development, and prototyping by their companies overwhelmingly takes place in the U.S., although printed circuit board fabrication, assembly, and are frequently sourced overseas. And although Meeker’s case study reported 84% of global printed circuit board production (fabrication) was sourced in Asia as of Nov. 2011, respondents to our survey reported that printed circuit board fabrication and assembly in China and Taiwan totaled 46%, and another 46% in the United States.

 Countries where Electronic Product Design & Mfg. are completed by companies that outsource. Stilwell Baker Survey, 2012.

Activity United States Canada Mexico China Taiwan India Other
Product Requirements & Specifications 75.0% 0.0% 0.0% 0.0% 4.2% 4.2% 16.7%
Electronic Engineering, Circuit & Firmware Design 69.6% 0.0% 0.0% 13.0% 8.7% 13.0% 21.7%
Mechanical Engineering & Part Design 73.9% 0.0% 0.0% 13.0% 8.7% 13.0% 21.7%
Industrial Design 77.3% 0.0% 0.0% 4.5% 4.5% 4.5% 18.2%
Mechanical Parts Fabrication 47.6% 0.0% 0.0% 42.9% 9.5% 4.8% 19.0%
Printed Circuit Board Fabrication & Assembly 45.8% 0.0% 0.0% 33.3% 12.5% 4.2% 29.2%
Prototyping 65.2% 0.0% 0.0% 17.4% 4.3% 4.3% 21.7%
Testing 69.6% 4.3% 0.0% 17.4% 4.3% 8.7% 26.1%
Product Manufacturing and/or Assembly 50.0% 0.0% 4.5% 40.9% 9.1% 4.5% 27.3%


Additionally, David Simchi-Levi, an engineering professor at MIT, surveyed 105 companies in 2012 and reported that 39% of U.S. manufacturers were contemplating moving some manufacturing back to the U.S; however, he also noted that only 14% of these companies were taking action to do so. Our survey didn’t directly address re-shoring, but instead gave us a benchmark of where electronic products are currently being produced, and whether or not the work is being completed inhouse. The two surveys are related, but drawing a correlation between them would be problematic because of differences in the samples.

Based on the results of our survey, and the evidence mentioned above, it appears that companies are taking a second look at developing and manufacturing electronic products within the United States. Going overseas doesn’t have the appeal that it once had because the rewards aren’t being realized in relation to the inherent risks. American companies are becoming more sophisticated in their analysis of the results of off-shoring and find them, in many cases, disappointing. Although companies in our industry may not be re-shoring in droves, executives are thinking twice before automatically pushing production to China, and that’s a change I’m glad we’re a part of.