Next Generation Manufacturing

Outsourcing for Growth

The 2011 Manufacturing Study revealed that manufacturers with rising sales will look for outsourcing partners in 2012 to help meet rising demand. Which activities are most commonly outsourced? Three critical functions:

• Transportation (88% of plants in 2011 vs. 72% in 2010),
• Information technology (68% in 2011 vs. 53% in 2010), and
• Maintenance (62% in 2011 vs. 44% in 2010)

Outsourcing (% of plants outsourcing activity)

Fabrication		Maintenance		Customer service
All	13.6%	All	5.0%	All	1.7%
Some	48.5%	Some	56.6%	Some	9.0%
None	37.9%	None	38.4%	None	89.4%
Assembly		IT		HR management
All	5.0%	All	12.9%	All	1.7%
Some	30.6%	Some	54.6%	Some	19.5%
None	64.5%	None	32.5%	None	78.8%
Electrical		Purchasing		Sales and marketing
All	15.3%	All	2.7%	All	2.7%
Some	42.0%	Some	6.6%	Some	25.3%
None	42.7%	None	90.7%	None	72.0%
Design and/or R&D		Transportation
All	5.6%	All	52.1%
Some	36.4%	Some	35.4%
None	58.0%	None	12.5%

What will you outsource for growth in 2012?

The Way We Outsource – It’s Not What You Might Expect

Manufacturers talk a lot about the need to outsource. Politicians talk about the high social cost of outsourcing. But data show that outsourcing isn’t nearly as prevalent here as in other parts of the world.

While more than half of U.S. manufacturers (57%) have outsourced some or all of their fabrication, nearly three-quarters of their international counterparts (72%) have done the same, according to the recently released 2010/2011 MPI Manufacturing Study.

Similarly, only 26% of U.S. manufacturers outsource some or all of their assembly — just half the amount of assembly outsourced by international manufacturers (51%).

There are also differences in where that work gets done. Among U.S. manufacturers, 83% of outsourced fabrication and 78% of outsourced assembly remains in North America. The next-largest share of work outsourced from U.S. plants — not surprisingly — goes to China (27% of fabrication and 28% of assembly).

International manufacturers tend to spread the work around more; the largest amount of fabrication outsourcing (31%) goes to Europe; the largest share of outsourced assembly (34%) is done in Asian locations other than China.

International manufacturers send 19% of fabrication and 16% of assembly to North American locations — in both cases, just a couple percentage points behind China.