A freight railroad official with strong ties to shipping out of Mexico says he is seeing some offshore manufacturing shift back to North America as labor costs rise in China.
“We have seen it very dramatically in the appliance world,” Brian Bower, senior vice president for sales and marketing at Kansas City Southern Railway, told the Credit Suisse Automotive & Transportation Conference in New York this week.
Bowers said the railroad, which has a north-south freight network that stretches deep into Mexico, has seen the manufacturing shift from companies such as Whirlpool, Samsung and LG -- companies whose manufacturing includes appliances and household consumer goods.
By The Numbers: U.S. Surface Trade With Mexico.
Manufacturing industry observers have suggested that rising labor costs could cut into the advantages many companies have gained in pushing factory work to China, luring them away from an offshoring strategy that has helped forge extensive global supply chains.
Michigan-based Whirlpool gave a boost to U.S. manufacturing last week when it announced plans to build a million-square-foot plant in Cleveland, Tenn., for making cooking appliances.
Bower said the light manufacturing involved in household goods is growing even more rapidly in Mexico.
“These companies are consolidating their operations in Mexico, and we’re seeing that in a very tangible manner on our trains,” Bower said.