Geopolitical risks that drive shipping, production, and other costs upward may be on the rise while the word undergoes disruptive changes. A 2023 Boston Consulting Group survey found that “trade disruptions have prompted many global companies to shift where they produce and source goods. But getting the desired results requires a difficult balancing act.” The survey found that:
- “More than 90% of the North American manufacturers we surveyed have relocated some production from China in the past five years—and a similar percentage plan to make such moves in the next five years. Mexico, Southeast Asia, India, Turkey, and Morocco are among the most competitive destinations.”
- “Only around 55% of respondents say that their production moves have fully achieved their objectives, such as cost savings, better access to labor, or faster time to market.”
Boston Consulting Group postulates that “to get better results, companies need to devise comprehensive manufacturing and sourcing footprint strategies that are tailored to their specific priorities and industry and that balance tradeoffs between landed costs and complex noneconomic factors that affect operations.”
The entire Boston Consulting Group report makes some interesting points.