The U.S. manufacturing industry slipped from fifth place to eighth in global cost-competitiveness, according to a new ranking from business advisory firm AlixPartners PPL.
Mexico held onto the lead spot as the lowest-cost country for outsourcing production for U.S.-based companies. China slipped from fourth to sixth place, although it improved over last year’s study in many aspects, AlixPartners said. India and Vietnam retained their second and third positions, respectively.
The study appears to disprove a growing perception that increased transportation, labor, and shipping costs were rendering offshoring disadvantageous and spurring a return to manufacturing on home turf. Such media reports, in fact, sparked AlixPartners’ interest as it set out to examine the cost/benefit of outsourcing manufacturing from the United States to key low-cost countries, according to the report.
Though the United States became more cost-competitive in the year-earlier study, it gave back those gains and slipped to 2005-2007 levels, due in part to the dollar’s uptick and a rapid decline in logistics costs. All major LCCs gained on the United States in 2009, according to the report.