Innovation and economic developments stimulate reshoring
The situation around COVID19 and the economic consequences this entails has changed our view on offshoring.
The vulnerability of global production chains has been exposed. The great distances and many links makes us weak. We have been warned more often in Western Europe in recent years, but the current pandemic seems to have really shaken us up.
Disadvantages of offshoring
The current crisis makes it clear that our dependence on low-wage countries is high. Being able to operate independently of these production countries has therefore become a topic of discussion.
In addition, there are many other factors that play a role:
In addition to the costs involved in transport, transport usually also takes a lot of time. This is no longer in line with today's consumer expectation “ordered today, delivered tomorrow”.
Quality and durability
Production in low-wage countries generally offers an increased chance of obsolete products. Testing and checking on our own continent often remains necessary. In addition, the long production chains are harmful to our environment and have an impact on scarce energy sources.
Some of the benefits of offshoring have become obsolete over time; for example, wages in these production countries have now risen sharply and the phenomenon of import duties has made a reappearance. Trade wars are settled unilaterally or multiplely with additional levies, import restrictions and bans.
This ensures that a product “Made in Europe” not only sounds attractive to the consumer, but can also be attractively priced.
Benefits of reshoring
Many manufacturing companies have been offshoring for decades. However, there are also (Dutch) producers who started to take back their production about 10 years ago; the so-called reshoring.
For example, the electronics group Philips, which moved its production to Asia in the 1990s, partly returned to the Frisian town of Drachten. The production of the slightly more expensive razors intended for the western market now takes place here because Philips saves transport costs in this way, among other things.Source: Reshoring Report
In addition to the aforementioned logistical savings, European manufacturing companies have higher quality standards and faster delivery. The Time to Market is therefore shorter and the chance of obsolete products smaller.
In some cases, production in Europe even leads to a cost-effective end product.
Also not unimportant
• Changes or new product variants can still be implemented at the last minute. This makes it possible to anticipate quickly.
• Sustainable production under decent working conditions.
• The Intellectual Property is secured.
• With a good production setup with the right automation, the Total Cost of Ownership (TCO) can in many cases be lower compared to offshoring.
Reshoring is further propelled by technological progress and innovation. Robotization and digitization compensate for higher hourly wages. These technological advancements are in an increasingly mature stage, making these solutions more affordable.
This article describes the general development and trend in reshoring. Different factors and figures come into play with each product and/or company. The TP Concept Study is a research to be carried out to answer the question whether reshoring makes sense in your specific case.
TP Concept Study
But which choice should you make from the forest of innovative, technical options to optimize your production and justify bringing production back to Europe?
Hans Totté, General Manager of Total Productivity BV: “We stand for a suitable layout with a well-considered and balanced relationship between automation and human labour. With our TP-Concept Study we are able to understand your business case and develop one or more suitable production concepts for it. With this, the decision to reshoring your production can be well-founded. The lead time is compact, the costs are limited, the results are valuable.
“By the way, such a TP-Concept Study is not only applicable in a reshoring situation, it is also the best way to create support and support for the introduction of new products or product variants, for example. In addition, Total Productivity is also able to make the developed concept concrete by realizing the project turnkey if desired.
Interested in your reshoring options?
Normally, the costs for using the Reshoring Tool are €995 (excl. VAT).
At the moment, as a collective, we are actively looking for companies that are considering reshoring and that we can help with the Reshoring Tool.
That is why Development Company NHN . has four free vouchers made available. We can therefore help the first four companies that are interested in using the Reshoring Tool for free.
Do not hesitate and contact us without obligation!