Biggest offshoring wave set to break
by Staff -- Manufacturing Business Technology, 7/1/2005 12:00:00 AM
Automotive components, fabricated metals, and pharmaceuticals are among the manufacturing sectors set to become part of the next big wave in offshoring, according to a New York-based McKinsey Co. 2005 quarterly report. These are among the skills-intensive sectors that will augment the labor-intensive sector that drove the first wave.
McKinsey estimates machinery, auto assembly, and telecom equipment also will drive up U.S. manufacturing imports from low-cost countries by 2015. Three dynamics will converge to signal the wave:
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Development of sophisticated supplier bases, particularly in automotive components;
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Construction of globally competitive manufacturing capacity in emerging economies like China in power and telecom equipment; and
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Annual expiration of $20 billion in U.S. pharmaceutical patents, spurring Indian drug companies to retool for faster, cheaper product introductions.
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