Manufacturing relocation through offshoring and backshoring: the case of Sweden

Abstract

PurposeThe purpose of this paper is to present recent empirical results concerning offshoring and backshoring of manufacturing from and to Sweden, to increase the understanding of manufacturing relocation in an international context. In particular, extent, geographies, type of production, drivers, and benefits of moving manufacturing in both directions are investigated.Design/methodology/approachThe study is based on survey data from 373 manufacturing plants. The same set of questions is used for both offshoring and backshoring between 2010 and 2015, which allows similarities and differences in decision-making and results between the two relocation directions to be identified.FindingsThere are many significant differences between offshoring and backshoring projects. Labour cost is the dominating factor in offshoring, as driver and benefit, while backshoring is related to many drivers and benefits, such as quality, lead-time, flexibility, access to skills and knowledge, access to technology, and proximity to R&D. This is also reflected in the type of production that is relocated; labour-intensive production is offshored and complex production is backshored.Research limitations/implicationsPlants that have both offshored and backshored think and act differently than plants that have only offshored or backshored, which is why it is important to distinguish between these plant types in the context of manufacturing relocations.Practical implicationsThe experience of Swedish manufacturing plants reported here can be used as a point of reference for internal manufacturing operations.Originality/valueThe survey design allows a unique comparison between offshoring and backshoring activity. Since Swedish firms in general have been quite active in rearranging their manufacturing footprint and have experience from movements in both directions, it is an appropriate geographical area to study in this context.