We get asked this question often by our clients, “Should we consider somewhere else besides China as we determine our manufacturing footprint?” Our answer has remained constant throughout the downturn and into the recovery:  Yes, of course!  Your supply chain design depends on many factors, including the cost of labor, but also overhead, transportation, lead times, supply base, local skill sets, markets served, demand variability, risk, etc. There is no absolute right location for all manufacturing.

Last week, Businessweek published an article called “Why Factories Are Leaving China”. The reporting accurately describes China’s rising wages and currency, but the title contains the sort of hyperbole that we have seen quite a bit recently. There is a great deal of talk (wishful thinking, perhaps?) that manufacturing outsourcing to China has reached some sort of tipping point, and now work is going somewhere else.

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What a decade the “00’s” have been: boom and bust followed by a mild boom and a giant bust!  The decade was ushered in by a “tech wreck” led recession and ushered out by the greatest global recession in a generation.  But through it all consumers kept consuming gadgets, businesses kept investing in IT, capital equipment and communications technology, and the EMS engine continued to crank out the products the world uses.

Despite two different periods of significant revenue contraction, the global EMS industry closed the decade having posted impressive growth since the turn of the millennium.  Even with the mild contraction of 2008 and the train wreck of 2009, the global EMS industry grew by approximately 125% in the decade (according to Riverwood Solutions’ Global EMS Index.)

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