Is a wave of supply-chain reshoring around the corner? — Micro
Is a wave of supply-chain reshoring around the corner?
Editor's note: Some of our covid-19 coverage is free for readers of The Economist Today, our daily newsletter. For more…
Even though supply chains are generally considered hard to change, an April survey found that up to 83% of multinational executives were thinking about reshoring, aka moving production back to the home countries of companies. This can have appeal to businesses by allowing them to cut transport costs and reduce inventory stocks. There also might be new markets opened up by reshoring, specifically to consumers who value ‘made in home country’ branding. Technology could make reshoring cheaper, with higher levels of automation allowing home country production at other country costs. 3d printing could wipe out 40% of trade flows by 2040.
However, many of these advantages might disappear for lots of sectors, especially ones which produce small goods that consumers generally don’t care about branding for like hearing aids. Other components not being made locally might also make this harder. The rise in tariffs could have had an effect, although it doesn’t seem like they’ve significantly shifted production back at current levels, especially when it comes to Trump’s tariffs. Supply chains generally seem to be resilient to changes due to the high costs of moving them and the benefits seem relatively marginal but its still possible that they could change.