Reshoring of Manufacturing

The aim of this paper is to analyze and classify research that has been conducted on manufacturing reshoring, i.e., the decision to bring back to the home country production activities earlier offshored, independently of the governance mode (insourcing vs. outsourcing). Literature reviews proposed until now usually paid almost exclusive attention to motivations driving this phenomenon. This paper offers a broader and more comprehensive examination of the extant knowledge of manufactiring reshoring and identifies the main unresolved issues and knowledge gaps, which future research should investigate. Moreover, the purpose of the paper is to provide avenues for future research and highlight the distinct value of studying manufacturing reshoring either per se or in combination with other constructs of the international business tradition. A set of 49 carefully selected articles on manufacturing reshoring published in international journals or books indexed on Scopus in the last 10 years is systematically analyzed based on the “5 Ws and 1H” (Who-What-Where-When-Why and How) set of questions. Our work shows a certain convergence among authors regarding what reshoring is, what its key features and motivations are. In contrast, other related aspects, such as the decision making and implementation processes, are comparatively less understood.

In the latest years location strategies of firms are gaining growing attention due to the recent rise of reshoring announcements, which cannot be considered just an outcome of new political platforms based on protectionism. Most of them aim at coping with problems determined by unsuccessful offshoring decisions. But, when considering how to implement a relocation choice, namely in terms of geographical destination and in terms of governance of the new manufacturing footprint, several concerns rise and a wide array of relevant factors can be identified, which can drive the effectiveness of a reshoring project. In this setting, offshoring and reshoring can be seen as possible outcomes of a “rightshoring” approach, regarded as the decision making process that leads towards sound location decisions. This paper proposes and empirically tests a theoretical framework according to which factors that should be considered in the location decision making process are the following: (1) strategic alignment; (2) business environment’s factors; (3) firm’s specific factors; (4) contingency factors. The preliminary evidence stemming out from the case-studies supports our framework.

This chapter sheds light on the reshoring of business functions. Policy makers and scholars are increasingly interested in the relocation of once offshored activities; however, the empirical evidence is mostly focussed on manufacturing activities, while very little is known about business functions that assist manufacturing activities. Using data from the Offshoring Research Network survey, this chapter provides some empirical evidence regarding the plans to reshore administrative and technical work. In particular, the chapter analyses the entry-mode, the home and the host country context, the business functions, the industries, the size and the performance of once offshored activities that are now planned to be reshored.

Knowledge is a key resource in any organization, and during a reshoring process, transferring knowledge to the home market is crucial. This study offers an in-depth comprehension of the factors influencing the knowledge transfer process in companies conducting in-house reshoring. We applied a qualitative multiple case study approach of Swedish organizations that fulfilled the criteria for in-house reshoring. Similar to other knowledge transfer processes, knowledge transfer during in-house reshoring is influenced by cultural, linguistic, and physical distances. Furthermore, reshoring motivation has an impact on the actors’ knowledge transfer motivation. This investigation clarifies knowledge transfer in the context of reshoring, and exposes the challenges of knowledge transfer during reshoring. The study signifies the importance of understanding reshoring motivation for the success of reshoring. It moreover contributes to the research on knowledge transfer by providing evidence of the influence of the role of knowledge on the choice of knowledge transfer methods. In addition, the study extends the research on the reverse direction of knowledge transfer, in terms of in-house reshoring scenarios.

Technologies embodied in the “Industry 4.0” concept are expected to heavily influence the competitiveness of countries, industries and companies. In this scenario, one of the most relevant technological transformations is represented by additive manufacturing technologies (AMTs). According to some scholars and practitioners, the adoption of such technologies may have a relevant impact on the location of production activities of many manufactured goods. This paper aims to verify the hypothesis that AMTs may act as an enabling technology for manufacturing reshoring, i.e., repatriation of (in-/outsourced) production activities earlier offshored. The paper adopts an explorative research approach based on secondary data belonging to the Uni-CLUB MoRe Reshoring dataset, containing information on more than 700 manufacturing reshoring decisions implemented by companies headquartered in the main Western countries. Based on such a dataset, eight companies were selected since they based their reshoring decisions on the adoption of AMTs. Findings from the analyzed case studies seem to confirm adoption of such technologies may contribute to the firm’s decision to repatriate production in the home country. At the same time, AMTs seem to influence the firm’s decision in terms of governance mode.

A common ground for many small businesses which are based and operate in Europe, capable today of standing against the waves of the globalization and the online economy, is the added value given by: (a) the quality of their services/products, and, (b) the trust they receive from their customers. Interestingly, such businesses are capable, in many cases, of maintaining the fidelity of a customer base, which is willing to pay more for their services or products when compared to what it would be paying when resorting to other channels. Such competitive advantage may be maintained as long as the quality of such services is high, one of the key factors that may also encourage and sustain the reshoring of many businesses to Europe. However, the quality of the products of many businesses is often hard to detect for a customer. Many exemplar cases may be individuated in organic farming and sustainable fashion and textiles. For instance, an average buyer may experience a very hard time when trying to distinguish at first sight an apple which has been obtained following organic protocols from one that has been produced following industrial procedures (e.g., use of chemical fertilizers). The same can be said for clothes, how may a consumer say whether given ethical rules and quality standards have been employed while weaving, knitting, felting, and braiding textiles? Because of these problems, in order to guarantee customers no malicious exploitations have been perpetrated, many of such companies resort to centralized and private certification programs. Unfortunately such certification programs can be expensive, long to implement, and even dishonestly exploited. In this scenario, we propose an integrated approach, based on two distinct and well-known ICT technologies, the Blockchain principle and sensor platforms, as a practical solution to preserve trust, increase the value of products and/or services and hence to encourage the reshoring of business activities. In particular, the model we here propose well applies to those business sectors whose actors share some type of immaterial asset related to the values that they convey with their products, which also, in many cases, represents their shared vulnerability point. Two exemplar business sectors where the proposed approach may be applied are represented by organic and sustainable productions in addition to all those which benefit from their association with specific geographical areas whose products, for given categories, are highly valued by customers (e.g., Made in Italy for fashion products). Because of the latter, the proposed approach may represent a viable pathway for the reshoring of companies from abroad.

Increasingly, turbulent global market factors and the mature domestic market conditions dictate firms from the advanced nations (e.g., United States, Western Europe, Japan) to pursue reshoring strategy. Literature review includes articles that provide understanding on the relationship between offshoring and reshoring. Through case studies, we further examine reshoring strategy of Japanese firms in China. We discuss first the historical background of outsourcing strategy of Japanese firms from 1960s to 2010. The multiple case studies of Japanese firms suggest that successful reshoring strategy requires advanced planning for preparing right contexts and careful coordination of goals implementations in terms of strategic cost reduction, productivity enhancements and strategic alliances with suppliers in China. In this sense, the learning outcomes through offshoring in China are reapplied in achieving successful reshoring strategy. Another important finding is that reshoring strategy is to strengthen the mother factories at home base for their long term global competitiveness.

Orbea is the oldest and biggest bicycle manufacturer in Spain and one of the most recognized bike brands in the world. With more than 175 years in the market, in the year 2007 Orbea decided to set up its third manufacturing plant in the Industrial park of Kunshan. After 8 years with activity there, in 2015 the company decided to close down the factory and reallocated its resources closer to the Headquarters. Some of the reasons that influenced its entry and exit decisions had their origin in the specific context of investment (place): China and the country-of-origin (COO) cluster in Kunshan. Other reasons of the reshoring and backshoring were related with the evolution of the sector, public support services (space) and market positioning in Asia- Pacific. However, as a result of that process, the company has acquired some knowledge and experience that will shape the strategy of Orbea. The objective of this case study is to analyse the role of the place and the space in the international relocation strategy of Orbea. This will involve studying the main decision factors as well as the major organizational adjustments related to the linkage between the structure and the location. The chapter compares the main literature on entry reasons, location mode and offshoring with the interviews conducted to Orbea’s managers during the period 2013–2016. This work will guide business practitioners in their international manufacturing strategy and academics to contribute to the study of the advantages generated in specific contexts such as COO clusters.

Since the 1990s there has been a significant trend in offshoring clothing production in the UK fashion industry. The trend of producing overseas has occurred with the aim of attaining lower labour cost advantages and is influenced by a range of factors, such as labour cost, the labour-intensive nature of the work, price pressure caused by other retailers, and unpredictable market demand. Recently, there has been increasing debate about bringing manufacturing back to the UK, especially in the clothing sector, in order to reduce lead-time and to provide better quality products. However, no research to date has addressed the implication for re-shoring in the context of country of origin. Thus, to fill this gap, qualitative research was undertaken to understand the concept of country of origin in the context of re-shoring as well as the implications linked to re-shoring. The chapter briefly outlines the changing role of retailers and manufacturer brands in the UK, highlighting how the differences between the two are blurring, while also outlining the different dimensions of country of origin in the context of retailers and manufacturer brands using a case study approach. Each dimension of country of origin, e.g. country of manufacture, country of parts, country of design and country of brand origin, also provides implications for re-shoring in the UK; this is supported by semi-structured interviews with key informants from the UK fashion industry. The chapter ends with a conclusion which summarises the study and provides avenues for further research.

The aim of this paper is to examine economic and political grounds and consequences of near-reshoring and reshoring activities in Polish apparel and footwear sector. As the consumers and companies perspective is taken, the applied method is a combination of surveys conducted amongst Polish apparel and footwear companies and consumers together with some statistical analysis about the evolution of this sector in Poland and anecdotal evidence about reshoring and near reshoring activities. The paper contributes to literature by taking both a value-driven and a political economy perspective and enhances the understanding as to how reshoring and near-reshoring can both reshape business models and serve as smart tools of a new protectionism at the level of the national or regional economy.