Bringing production work back to the Netherlands from low-wage countries: is that the new trend of the moment? Will the tide turn? Reshoring is the theme of the eighth episode of NOM Talks, the podcast on topics facing entrepreneurs. From agility to innovation, from funding to employees. Topics covering all phases of entrepreneurship.
Anyone looking for the definition of reshoring in the Dikke Van Dale will be in for a rude awakening. Whereas counterpart offshoring - "moving work to low-wage countries" - is clearly defined, the digital version of the dictionary cannot even find reshoring. Is reshoring such a new economic opportunity that it is not yet widely known?
Whether reshoring is at all a new economic opportunity, the host of NOM Talks Wim A,B. and his ever-present sidekick Rob Drees ask two guests. In this broadcast, two directors are joining them, both of whom have experience with production in the Netherlands and abroad. Both Giel Franken of Carver Europe in Leeuwarden and Douwe Oldenbanning of Olba in Coevorden are familiar with reshoring as a strategic business choice. As an entrepreneur, why should you or should you not bring production back to the Netherlands? You will hear the answers to that question - small spoiler: there are several - in the eighth episode of NOM Talks.
'Raw material is no longer cheaper'
The biggest weighing factor for offshoring is simple and an open door: it is still simply cheaper. Directors Oldenbanning and Franken make no bones about it. For example, Franken's Carver - a 100% electric city vehicle - is largely produced in South Korea and finished in Leeuwarden. ''We are not an assembly plant, but choose to put our resources into building the brand. That's a conscious choice.''
Nevertheless, the flag of cheap production is now flying less and less often, not least because of the enormously increased transport costs. Long before the corona crisis, Oldenbanning invested more than one and a half million euros to bring back part of its plastic production - Olba produces products for poultry and rodents - from China. And turned out to be a front runner. Especially the larger products he now makes himself. ,,There's a lot of raw material in there, but raw materials together are certainly no longer cheaper in China.''
Just do it sustainably
Those who bring their production back to the Netherlands are, by definition, more sustainable. That is sometimes used as the leading argument in favor of reshoring. No more containers being shipped halfway around the world on huge, polluting cargo ships. Saves a lot, right? And also good for sales, Oldenbanning explains in this edition of NOM Talks. ''More and more customers are asking for it. How you sell your product: that's what it's all about. A good story is then always positive to the user.''
But is reshoring really as sustainable as is usually assumed at first? That remains to be seen, says Jack van der Veen, professor of Supply Chain Management at Nyenrode Business University. He elaborates on these and other factors that determine whether reshoring is a wise business choice in his article "Reshoring is not a simple solution to current supply chain problems. Whether reshoring is really as sustainable as proponents claim, the entire chain will have to prove. ''Manufacturing in China sometimes has great advantages because raw materials also come from there and bringing them to Europe is not really sustainable.''
To then say that you are selling a sustainable product, of course, smacks somewhat of greenwashing. Anyone who sees that sustainability is becoming an increasingly important consideration for customers in deciding whether or not to purchase a product or service will have to take responsibility for wanting to improve not only their own share, but also that of others in the chain. Only then will sustainability become a factor in ensuring a sustainable future for your company.
Individual customization
Do you choose reshoring or not? There's just a chance that when you put your production in China, a Chinese person will run off with your product or intellectual property. Oldenbanning knows plenty of those stories, he tells in this podcast. That's when manufacturing nearby is worth considering. Perhaps the current labor market shortages mean there are no personnel to be found in the Netherlands to make your products, and you have to rely on foreign countries. Or, as Carver, you simply choose to build and market a brand.
Left or right, there is a huge mountain of reasons for entrepreneurs to venture into reshoring. And there are also a lot of reasons not to. In this podcast, enough of them come by for your pros and cons list. So the conclusion cannot be drawn unequivocally. The choice for reshoring is always customized, and there are many more aspects to consider - says Professor Van der Veen - than the initial assumption. The pros and cons from episode 8 of NOM Talks will hopefully help you on your way. Listen here