How about a supply chain closer home

Bringing manufacturing back to Europe — what’s called “reshoring” or “onshoring” — is a reasonable, if not vital, business strategy. Over the previous two decades, manufacturers shifted production of everything from cars to cosmetics primarily eastwards to China, in an attempt to cut labor costs and protect margins. The supply chain snarls brought on by geopolitics and Covid-19 are now forcing a rethink.
Some recent developments have helped. Carlo
Altomonte, professor of economics of European integration at Milan’s Bocconi University, argues the recent speed of European integration is fostering a “regionalisation” of supply chains. But reshoring is still complicated — and will require difficult choices from both companies and governments.
Take the predicament of Dardanio Manuli, chairman and chief executive officer of Manuli Rubber Industries SpA, an Italian multinational that makes hydraulic equipment. He thought he had already brought his supply chain back from China, finding suppliers for steel and wire in Europe — specifically, Germany, the UK
and Luxembourg.
Then, Vladimir Putin’s invasion started and Manuli discovered his new suppliers had all been sourcing their pig iron from Ukraine, specifically, a single factory in Mariupol. “We thought we were already onshoring, but Europe turned out to be the weakest link,” he says.
Data showing large-scale reshoring is still hard to find. There is some anecdotal evidence. Dusseldorf-based retailer C&A Group is
opening a new textile plant in Germany to produce 400,000 pairs of jeans a year.
Swedish carmaker Volvo Car AB announced plans to build a third factory in Europe in 2025. Smaller businesses are getting into the act. Maia & Borges, a toymaker based in northern Portugal, is on course for 12 million euros (almost $13 million) of revenue in 2022, up from 1.5 million euros in 2019, having won multiple orders — from Europe,
and the US — when Asian supply chains were snarled up in the early months of the pandemic.

—Bloomberg