Otis decides to return manufacturing to an American plant

A Wall Street Journal (Oct 6, 2011) report describes a decision by Otis to move production from Mexico to South Carolina. Reasons cited include (a) 70 % of its customers will be closer to the new plant, (b) Freight and logistics costs lowerd by 17.3 %, (c) Efficiencies from deisgn and production being colocated would generate another 20 % savings, (d) Greater automation will decrease labor’s content of the total cost.   Given changes in US labor and other costs, has US manufacturing closed most of the cost gap with other global loactions ? Are rising fuel prices diminishing most of the cost gains from global manufacturing locations ? Is the attention, and consequent marketing gains, that is derived from this decision sufficient to compensate for any associated cost increases ?

About aviyer2010

Professor
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