The Consumer Technology Association (CTA) ® today released new research that provides a roadmap for American policy makers looking to diversify supply chains and expand manufacturing operations from China. The study shows that moving all tech manufacturing jobs from China to the U.S. would require $500 billion in direct investment and more than a tenfold increase in the workforce for both manufacturing and the indirect supplier ecosystem, which simply isn’t feasible.
The study, “Building a Resilient U.S. Consumer Technology Supply Chain,” was commissioned by CTA and conducted by Kearney, and shows that moving operations to allied countries and trade partners is feasible – if the right private-sector and public-policy steps are taken now.
“We’ve seen very clearly over the past few years just how important diversified, cost-effective supply chains and geopolitical challenges are in the delivery of vital products to consumers,” said CTA president and CEO Gary Shapiro. “This study shows that moving all manufacturing operations back to America just isn’t feasible. But it also shows companies and policy makers what can be done now and over the next 10 years to make sure American consumers can continue to efficiently access the technology and lifestyle improvements they want, expect, and deserve. In short, we need to work more closely and cooperatively with our trade BFFs around the world.”
The study’s key findings include:
- The most significant threat to consumer technology supply chain resiliency is dependence on a single geographical area -- Mainland China, which leads every other single geographical area in terms of share of the supply chain in all four of the key consumer technology sectors: computers and peripherals, communications, audio and video, and semiconductors and other components, holding close to a 40% global share of exports and 23% of U.S. tech consumption.
- Completely reshoring technology manufacturing operations back to the United States is simply not practically or economically feasible given the scale and complexity of required resources and underlying economic production structure.
- The U.S. is in a position to grow the contribution of the U.S., allies, and key trade partners from the current 66% to 90% of the American-bound tech supply chain by 2033.
- A multi-geography “team approach” is the best route to supply chain resiliency. This involves embracing treaty allies and key trading partners like Vietnam, India, Canada, Mexico, France, and Germany.
- Public-policy actions that can be taken now to streamline the “nearshoring” and “friendshoring” processes include negotiating free trade agreements with the UK and Vietnam, removing trade barriers between America and India, joining the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP), and fully implementing and enforcing the US-Mexico-Canada Agreement (USMCA.)
“We’ve never been as reliant on the consumer technology supply chain as we are today and we’re likely to be even more so tomorrow given the continued “electronification” of everyday product categories,” said Patrick Van den Bossche, Partner at Kearney. “Reducing dependence on a single geographical area is not an immediate shift as it takes time to plan, budget, build, test, and ramp up new facilities, as well as to attract and train new employees. So, it’s critical that we start working with our trade partners and treaty allies, as well as with companies today.”
You can read an executive summary of the study here.
About CTA
As North America’s largest technology trade association, CTA is the tech sector. Our members are the world’s leading innovators - from startups to global brands — helping support more than 18 million American jobs. CTA members enjoy benefits including policy advocacy, market research, technical education, industry promotion, standards development, and the fostering of business and strategic relationships. CTA also owns and produces CES® — the most powerful tech event in the world. Find us at CTA.tech and follow us @CTAtech and @CES.
About Kearney
Kearney is a leading global management consulting firm. For nearly 100 years, we have been a trusted advisor to C-suites, government bodies, and nonprofit organizations. Our people make us who we are. Driven to be the difference between a big idea and making it happen, we work alongside our clients to regenerate their businesses to create a future that works for everyone.