(Sorry, my watching Wimbledon resulted in a McEnroe quote but the shoe fit)
Onshoring, reshoring, or nearshoring, is gaining momentum. Duh, but some of the comments being made. How can the average CEO pay be 670-1* when they are SO inept at running their companies?
For 30 years companies have been taking all manners of production off US shores in the interest of “accessing new markets” and “lowering costs”. Many of us tried to point out that their logic was flawed. Not ALL products and processes needed or should go offshore. That they were either ignoring the numbers to follow a trend of other companies, or their subordinates, reading the room and not wanting to rock the boat, showed them numbers that reinforced the delusion that they should go offshore.
The latest issue of Bloomberg Magazine** “American Factories Are Making Stuff Again as CEOs Take Production Out of China,” is chocked full of quotes that made me want to gag.
Since I was a young engineer, CEOs we redemanding their staffs get them offshore. Mainly because that is what their competition was doing. Now this article is quoting them as saying, “This is just economics,” and “Low shipping costs and quick delivery times are proving a hit with clients and paving the way for the company to keep growing,” and my favorite, “this is being thought through in a way that has never been done before.” Uh, it was thought through, and either they did what they wanted or were given incomplete data that reinforced their initial delusion.
The article DOES call attention to GE having recognized the false lures of offshoring for larger items and successfully does manufacturing in the US. Then looked around to see who would follow and few did.
The article also addressed what many have talked about for years, the volatility of politics getting involved. With Russia’s invasion of Ukraine, CEOs “all of a sudden” realize that manufacturing sites elsewhere could be taken away by such political territory and property grabs. Really?!?!?!?!
I told you so never does seem to go over well, regardless of how applicable. Perhaps now though, companies will take a TOTAL COST look at their sourcing decisions and run their business on analytics rather than top-down sentiment of “keeping up with the Joneses.”