The report's authors interviewed over 100 managers at 54 large companies in the electronics, automobile components and machine tool sectors. About 60 percent were based in Germany, 10 percent elsewhere in Europe and 10 percent in Asia and the US
"The survey was much more positive for the future of Germany as a manufacturing location than we had expected," Eberhard Abele, director of the Institute of Production Management, Technology and Machine Tools at Darmstadt, told reporters.
"Most companies achieve cost savings of only 10 percent or less in new production locations", compared with maximum potential savings of 40 percent, he said. "Only about 20 percent of all companies achieve considerable savings."
Plans by German companies to move plants offshore have left many employees fearing for their jobs in an economy dominated by manufacturing industry and bordered on the east by new EU member countries in which labour costs are much lower than at home.
Carmakers Volkswagen and DaimlerChrysler and engineering group Siemens, threatened last year to move thousands of jobs abroad if German workers refused to accept pay freezes or reductions in other benefits.
In all three cases, deals were struck that secured jobs in Germany at a lower cost to the employers. But the pressure for companies to scour the globe for new production locations will continue, partly because of growth patterns, the experts said.
"No company wanting to create jobs can ignore the fact that only limited growth is possible in western Europe in the foreseeable future and that new opportunities are opening up in eastern Europe, India or China," said Raimund Diederichs, head of McKinsey's European supply chain management practice.
"Successful companies are present in all relevant markets, not just with a sales organisation but with production sites."
BMW, which is challenging DaimlerChrysler's Mercedes brand to be the world's top maker of premium cars, said on Wednesday it might build a car plant in India to help it hit an Asian sales target of 150,000 cars within three years.
European managers expect that local advantages from operations in Europe such as access to key markets, know-how, supply of skilled labour and infrastructure will continue to decline between now and 2010.
Opportunities for Germans lie in the ability of their firms to innovate quickly and combine research and development with production facilities to produce high-value goods.
"The higher value the product, the more important it is to have R&D and production in one location," said Abele. "We have a chance and that is in innovation," he added, citing BMW and sports goods maker Puma as successful examples.