A survey of 143 manufacturing and distribution executives found that the biggest challenges of nearshoring are labour costs, cited by 44% of respondents. The second biggest challenge is local regulations, selected by 29% of respondents. The largest perceived advantages of nearshoring are lower inventory costs, cited by 67% of respondents, and lower freight costs, cited by 59% of respondents.

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For nearshorers, costs are king
Inventory and freight costs may be tamed, but labour costs bite
© The Economist Intelligence Unit, 2016.
Source: AlixPartners survey of 143 senior executives from manufacturing and distribution, March 2014.
What are the biggest challenges you have had or expect to have with nearshoring?
Respondents were asked to select three choices. Top ten results.
What are the biggest advantages you would expect from a nearshoring decision?
Respondents were asked to select three choices.
Capacity,
customer approval,
localising supply
36%
Availability of
skilled labour
33%
Quality and
consistency
30%
Labour costs
44%
Local regulations
29%
Cross-border
transport
16%
Personnel
16%
Customs
regulations
13%
In-country
transport
13%
Security
14%
Smaller wage gap 7%
Intellectual
property
security
12%
Lower
input
costs
13%
Better quality control
19%
Time-zone advantage
18%
Lower inventory costs
67%
Lower freight costs
59%
Duty and tax benefits
27%
Proximity to customer
42% Fewer supply disruptions
30%