repatriation of manufacturing in europe
TRANSCRIPT
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Repatriation of manufacturing in Europe
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What we’ll cover
Are companies repatriating?
What is primarily driving this change?
What does all of this mean for Europe?
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Re-shoring: real trend or hype? The flow of offshoring and re-shoring
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IS RE-SHORING NEXT?OFFSHORING
Is re-shoring a natural phaseof the cycle?
% manufacturing in GDP in Western Europe
1850 1950 2000
Rising cost of labourGlobalisation
??
DOMESTICALLY DRIVEN MANUFACTURING
Industrialisation
Economic & population growth
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A lot of publicity…. but in facts?
Let’s take a step back …
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… potentially a lot of room for repatriation!
Over 60% have offshored more than 50%of manufacturing!!
Extent of Offshoringas % of manufacturing production
3%7%
21%
7%
0%, all production is domestic
1-25%
26-50%
51-75%
76-99%
100%41%
21%
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Production vs. consumption centres:but rebalancing is underway…Consumption vs production markets
USA / Canada
19%
37%
Western Europe
27%
47%
EE + Turkey+ Russia
12%3%
Asia
35%
10%
Latin America
4% 0%
Top manufacturing centre
Top consumption market
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Repatriation still the exception…
17%
Yes, to mydomestic market
In the last five years, have you moved all or parts of your offshore manufacturing operations back to your domestic market ormacro-region?
7% Yes, to my macro-region
76%
No
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…with no big changes in sight
11%
Yes
Are you considering repatriation in the next 3 years?
89%
No
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Drivers of offshoring: proximity matters as much as costs!Offshoring main drivers
4%
46%
4%Cost of labour
Other operational costs
Proximity to new consumer markets
Government grants
Proximity / availabilityof suppliers
35%
12%
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Reasons for repatriation
Top three considerations; % of sample
Proxi
mity
to k
ey m
arke
ts
Supply c
hain o
ptimis
atio
n/ tra
nsport
cost
s
Erosi
on of c
ost a
rbitr
age
Shortage
of req
uired s
kills
Cultura
l issu
es a
nd man
agem
ent d
iffic
ulties
Reputa
tion
0%
20%
40%
60%
80%
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Offshoring vs Re-shoring
Drivers of offshoring and re-shoring in our analysis…
Proximity
Labour Cost
Supply chain
TWO SIDES OF THE SAME COIN?
Offshoring Re-shoring
1
2
3
Proximity
Supply chain
Labour Cost
1
2
3
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Offshoring + Re-shoring= “Best-shoring”
IS RE-SHORING NEXT?OFFSHORING
% manufacturing in GDP in Western Europe
1850 1950
BEST
SHORING
2000
Rising cost of labourGlobalisation
DOMESTICALLY DRIVEN MANUFACTURING
Industrialisation
Economic & population growth
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Manufacturing in Western Europe:the past and the future
Evolution of manufacturing output:
last 5 years next three years0
5
10
15
20
25
30
35
up
down
%
Only European companies All sample
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Competitiveness:Europe losing ground
Source: Deloitte, Manufacturing Competitiveness Index
Europe 2013 In five years
Germany 2 4
Poland 14 18
United Kingdom 15 19
Czech Republic 19 22
Netherlands 23 24
France 25 27
Belgium 27 30
Italy 32 34
Portugal 35 37
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“Hot spots” for manufacturing Intentions regarding production capacity in the next three years
Increase in production capacityStable production capacityDecrease in production capacity
USA / Canada
37% Western Europe
52%EE + Russia
+ Turkey
48%
China
44%
India
37%
Japan
31%
Latin America
30%
Africa & Middle East
26%
Rest of Asia
33%
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Regional specialisation
Source: Top European Logistics Hubs, Colliers Internationalwww.colliers.com/emea/logisticshubs
Main advantage for each region
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The future of manufacturingin Europe
+
+
+/-
+/-
TECHNOLOGIC INNOVATION INFRASTRUCTURE + LOGISTICS IMPROVEMENTS
3D printing Deep sea water ports
Cheaper robots and
growing automation Railway connections
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Dilbert’s Best-shoring plans