Over 60 percent of European and US manufacturing companies expect the next three years to onshore or re-shore part of their Asia production. In the majority of these cases it is about limited volumes (minority of the volume) and/or critical parts and products. But one out of five companies expects to repatriate even the majority of the China and Asia production capacity.
For Europe Central and Eastern Europe are favorite (particularly Czech Republic, Poland, Hungary) as new location for production in Europe, but about 50 per cent of the companies will consider Germany, the Netherlands and Belgium as well. For production which is expected to re-shore to North America the US itself is the leading candidate location, followed by Mexico.
These are the main conclusions of a survey BCI Global carried out on Global Reshoring & Footprint Strategy. BCI Global is a leading supply chain and manufacturing footprint and location consulting firm, operating with teams and offices in Europe, North America, China and Asia. The research project was supported by Supply Chain Media, a trend watching and publishing company specialized in creating research based practical frameworks for supply chain management.
Senior level executives of 125 companies participated in the research (70 European, 40 US and 15 Asian) active in pharma & medtech, machinery & automotive and consumer packed goods.
“The research results clearly show that reshoring is a hot topic on the agenda in the board rooms of international companies. The many supply chain disruptions in the last years with Covid-19, lack of products and components and sky rocketing ocean freight rates force companies to reconsider their manufacturing footprint. Sixty percent of the companies expect the next three years to move part of their China and Asia production back to Europe or the US. Agility and flexibility are now the key drivers for the value chain set-up, at the expense of lowest cost solutions”, says Patrick Haex, managing partner Global Supply Chain Solutions at BCI Global.
It is understandable that especially in Europe, one does not see yet reshoring at high levels, because substantial hurdles have to be overcome explains René Buck, CEO of BCI Global. “Higher operating costs in Europe and the US due to lack of scale and the lack of supplier bases in these regions are major hurdles. We see in our advisory practice every day that this is not an easy decision”.
Many companies expect the next 3 years a shift from country-by-country planning to primarily planning and supply chain organization at a global level, notices Martijn Lofvers, CEO at Supply Chain Media. “Companies combine organizing their supply chain at a global level with a focus on flexibility, customer focus and assemble-to-order. Even companies who have an operational excellence business strategy shift away from lowest costs and make-to-stock tactics”.
The next 3 years will show a never seen acceleration of automation and robotization, to cope with labor shortages and higher personnel costs in Europe and the US. Highly automated manufacturing processes will increase from 18 in 2021 to 47 per cent in 2024, and the same goes for distribution centers (2021: 3; 2024: 27%).