Abstract
The explorative paper investigates the drivers for the emerging trend of manufacturing reshoring from low- to high-cost locations. To date research on the reshoring phenomenon has been dominated by micro-level analyses of firms in supply chain management and reported in international business literature. The paper introduces reshoring as a research topic to the economic geography research field, arguing that it connects with the broader topic of regional development. To provide a better understanding of the reshoring phenomenon and to test the applicability of the global production network (GPN) framework in the analysis of the phenomenon, the authors analyse the reshoring of nine of Norwegian manufacturing firms. With the multiscalar lens provided by the GPN framework, the authors find that the implementation of advanced manufacturing technologies is a driver for manufacturing reshoring, but only when matched with key regional assets such as automation knowledge and competence, key human capital, and region-specific manufacturing competence. Additionally, reshoring decisions are influenced by extra-regional factors such as changes in the global economy and market fluctuations. Furthermore, the paper provides a refined conceptualization of strategic coupling processes by including acts of disinvestments and reinvestments performed by actors within global production networks. Accordingly, the authors advocate a more nuanced understanding, defined as partial coupling processes, in contrast to the predominant understanding of coupling processes as ruptures. This refined conceptualization provides enhanced analytical purchase when studying the reshoring phenomenon, as it illuminates the complexity of firms’ production and sourcing strategies and the resulting implications for the economic landscape.
Highlights
A key trend, especially over the last three decades, has been that many European and Northern American manufacturers have moved all or parts of their production activities to low-cost countries in Asia, Eastern Europe and Latin America (Neilson et al, 2014)
We suggest that the global production network (GPN) framework (Yeung and Coe, 2015) provides novel explanatory power to the intricate processes of manufacturing reshoring
In this paper we have explored the drivers for reshoring in a highcost context (Norway) and the applicability of the GPN framework for analysing the phenomenon
Summary
A key trend, especially over the last three decades, has been that many European and Northern American manufacturers have moved all or parts of their production activities to low-cost countries in Asia, Eastern Europe and Latin America (Neilson et al, 2014). Offshoring and outsourcing of production are conscious firm strategies to achieve comparative advantages (Blinder, 2006, Coe and Yeung, 2015, Stentoft et al, 2016), such as lower labour costs and access to emerging markets (Lonsdale and Cox, 2000). These processes of locational switch, which more recently have seen companies from emerging economies such as China move their production activities to less developed Asian economies such as Vietnam (Sirkin, 2019), have been central to processes of economic globalization (Dicken, 2015). They include increasing production costs in emerging economies, growing digitalization in OECD economies, and miscalculation of total costs in decisions made prior to offshoring (De Backer et al, 2016, Barbieri et al, 2017)
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