23008_Nearshoring Report

NEARSHORING that is, moving production or supply to locations closer to markets of consumption, is part of their considerations. This could involve reshoring (the movement of facilities that once were established in father away locations back to home or near-to-home markets) or new investment in home or near-to-home markets where previously a farther away location would have been considered. In a 2022 survey by ABB, 74% of European businesses are planning to re- or nearshore operations to “build their supply chain resilience in response to labour shortages, the need for a more sustainable global footprint and global uncertainty”. Moving production closer to markets of consumption becomes more attractive when the cost advantages of being offshore versus maintaining control and flexibility no longer favour farther away locations. This balance can also be disrupted when there is a change in company priorities, both economic/ operational (such as shorter lead times) and cultural/legal (such as worker safety and environmental protection or preferences for locally-made goods).

DRIVERS FOR NEARSHORING TEND TO COALESCE AROUND 3 KEY AREAS

ECONOMIC costs (including for labour and transport), business flexibility and supply chain resilience

POLITICAL where trade restrictions and tariffs make importing products from outside agreement areas challenging/costly; where encouraging development on regionalised manufacturing/ production capacity is seen as strategically important for economic, social and health reasons CULTURAL/SOCIETAL including sustainability, business culture (for example, expectations of worker welfare), customer preference (for example, choosing to buy products ‘Made In’ initiatives)

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