Manufacturing relocation through offshoring and backshoring: the case of Sweden

• Published in: Journal of manufacturing technology management Vol. 29; no. 4; pp. 637 - 657
• Main Authors: Johansson, Malin, Olhager, Jan
• Format: Journal Article
• Language: English
• Published: Bradford Emerald Publishing Limited 23.05.2018; Emerald Group Publishing Limited
• Subjects: Advanced manufacturing technologies; Civil Engineering; Competitive advantage; Consumer goods; Costs; Decision making; Economic Geography; Economic growth; Ekonomisk geografi; Engineering and Technology; Flexibility; Global manufacturing networks; Global operations; Industrial engineering; Industrial plants; International business; International manufacturing networks; Lead time; Manufacturing; Manufacturing engineering; Multinational corporations; Offshore; Operations management; Outsourcing; Quality; R&D; Relocation; Research & development; Reshoring; Rightshoring; Samhällsbyggnadsteknik; Samhällsvetenskap; Social and Economic Geography; Social och ekonomisk geografi; Social Sciences; Survey research; Teknik; Transport Systems and Logistics; Transportteknik och logistik; Sweden; Global manufacturing networks; Operations management; Survey research; Rightshoring; Global operations; International manufacturing networks; Reshoring
• ISSN: 1741-038X; 1758-7786
• DOI: 10.1108/JMTM-01-2017-0006

Purpose The purpose of this paper is to present recent empirical results concerning offshoring and backshoring of manufacturing from and to Sweden, to increase the understanding of manufacturing relocation in an international context. In particular, extent, geographies, type of production, drivers, and benefits of moving manufacturing in both directions are investigated. Design/methodology/approach The study is based on survey data from 373 manufacturing plants. The same set of questions is used for both offshoring and backshoring between 2010 and 2015, which allows similarities and differences in decision-making and results between the two relocation directions to be identified. Findings There are many significant differences between offshoring and backshoring projects. Labour cost is the dominating factor in offshoring, as driver and benefit, while backshoring is related to many drivers and benefits, such as quality, lead-time, flexibility, access to skills and knowledge, access to technology, and proximity to R&D. This is also reflected in the type of production that is relocated; labour-intensive production is offshored and complex production is backshored. Research limitations/implications Plants that have both offshored and backshored think and act differently than plants that have only offshored or backshored, which is why it is important to distinguish between these plant types in the context of manufacturing relocations. Practical implications The experience of Swedish manufacturing plants reported here can be used as a point of reference for internal manufacturing operations. Originality/value The survey design allows a unique comparison between offshoring and backshoring activity. Since Swedish firms in general have been quite active in rearranging their manufacturing footprint and have experience from movements in both directions, it is an appropriate geographical area to study in this context.