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Repatriation of manufacturing in europe

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  • We analysed manufacturers’ global locational strategies, particularly the new phenomenon of re-shoring, to predict the future of manufacturing in Europe67% of the companies surveyed come from Western Europe, 28% from North America75% have more than 2500 employeesThe Automotive sector is the most represented in our sample, followed by “Food & Beverage” and “Electronic & Electrical Equipment”
  • How to read the numbers:e.g. 52% of the sample plan to maintain production capacity stable in Western Europe

Transcript

  • 1. Repatriation of manufacturing in Europe
  • 2. What we’ll cover Are companies repatriating? What is primarily driving this change? What does all of this mean for Europe?
  • 3. Re-shoring: real trend or hype? The flow of offshoring and re-shoring
  • 4. IS RE-SHORING NEXT?OFFSHORING Is re-shoring a natural phase of the cycle? % manufacturing in GDP in Western Europe 1850 1950 2000 Rising cost of labour Globalisation ?? DOMESTICALLY DRIVEN MANUFACTURING Industrialisation Economic & population growth
  • 5. A lot of publicity…. but in facts? Let’s take a step back …
  • 6. … potentially a lot of room for repatriation! Over 60% have offshored more than 50% of manufacturing!! Extent of Offshoring as % of manufacturing production 3% 7% 21% 7% 0%, all production is domestic 1-25% 26-50% 51-75% 76-99% 100%41% 21%
  • 7. 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
  • 8. Repatriation still the exception… 17% Yes, to my domestic market In the last five years, have you moved all or parts of your offshore manufacturing operations back to your domestic market or macro-region? 7% Yes, to my macro-region 76% No
  • 9. …with no big changes in sight 11% Yes Are you considering repatriation in the next 3 years? 89% No
  • 10. 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 / availability of suppliers 35% 12%
  • 11. Reasons for repatriation Top three considerations; % of sample 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% Proximity to key markets Supply chain optimisation/ transport costs Erosion of cost arbitrage Shortage of required skills Cultural issues and management difficulties Reputation
  • 12. 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
  • 13. Offshoring + Re-shoring = “Best-shoring” IS RE-SHORING NEXT?OFFSHORING % manufacturing in GDP in Western Europe 1850 1950 B E S T S H O R I N G 2000 Rising cost of labour Globalisation DOMESTICALLY DRIVEN MANUFACTURING Industrialisation Economic & population growth
  • 14. Manufacturing in Western Europe: the past and the future Evolution of manufacturing output: 0 5 10 15 20 25 30 35 last 5 years next three years % up down Only European companies All sample
  • 15. 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
  • 16. “Hot spots” for manufacturing Intentions regarding production capacity in the next three years Increase in production capacity Stable production capacity Decrease 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%
  • 17. Regional specialisation Source: Top European Logistics Hubs, Colliers International www.colliers.com/emea/logisticshubs Main advantage for each region
  • 18. The future of manufacturing in Europe + + +/- +/- TECHNOLOGIC INNOVATION INFRASTRUCTURE + LOGISTICS IMPROVEMENTS 3D printing Deep sea water ports Cheaper robots and growing automation Railway connections
  • 19. Dilbert’s Best-shoring plans