From FreightWaves, June 16:
Companies are unlikely to reshore their supply chains from Asia to North America between now and 2025 due to high production costs, concerns about the business climate in Mexico, and fears of the loss of access to close-by markets of billions of consumers, according to a report released Wednesday by the Economist Intelligence Unit (EIU), the business intelligence operation of London-Based The Economist Group.
The conclusion goes against the widely held belief that businesses selling into North American markets would shift their supply chains from Asia in an effort to counter the massive and continuing supply chain disruptions caused by the COVID-19 pandemic. However, the EIU report said that as pandemic-related concerns fade with more people getting vaccinated and countries reopening, the emphasis on business resiliency that was a key discussion point during 2020 and in the early part of 2021 will fade with it.
Andrew Viteritti, the EIU’s commerce and regulations lead, said in a Wednesday interview that most multinational firms with long-standing Asian operations will return to their pre-COVID-19 behavior of basing supply chain decisions on operational cost-effectiveness and maximum revenue opportunities rather than on the need to establish supply chain redundancies. This means, for the most part, a continued reliance on low-cost Asian production, Viteritti said.
Shifting production and distribution operations thousands of miles is a costly and complex investment, and relocating supply chains to North America would deprive businesses of cost-effective means of penetrating Asian markets with consumers possessing more disposable income than ever before, Viteritti said....
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