Nearshoring gains ground as companies seek agility, cost savings and speed to market

In increasing numbers, North American companies are looking to the US, Mexico and Latin America to locate their manufacturing operations. And European Union (EU) companies are looking to Eastern Europe and Turkey for the same reason–to move production closer to their end markets.

In a recent article in MHI Solutions, Dinah Wisenberg Brin explains why nearshoring is gaining traction globally. She attributes the change to several factors, including:

  • Increasing wages in India and China
  • The cost and time to ship goods to the United States and for U.S. executives to travel to overseas providers
  • A “lack of cultural affinity” between the U.S. and Canada and other more distant outsourcing destinations
  • Time zone disparity.

She cites a survey by  BDP International and Temple University’s Fox School of Business that found that 87 percent of supply chain and logistics executives surveyed indicated their companies were considering or had started to move production closer to end markets. This is also confirmed by new research released by AlixPartners that found that the U.S. is now equal to Mexico in “attractiveness” as a source for manufacturing operations and is on track to achieve cost parity with manufactured imports from China by 2015.

That report advises that before companies set up or move production they need to perform thorough, case-by-case analyses as a number of critical factors — including product type, location, transportation and other variables — that can greatly impact attractiveness and cost-effectiveness.

Read the complete article.

.