Location, location, location: exploring macro-market influences and impacts of re-shoring on operational decision-making

Cockayne, David, Papalexi, Marina ORCID: https://orcid.org/0000-0003-1125-7015 and Jordan, Christine (2016) Location, location, location: exploring macro-market influences and impacts of re-shoring on operational decision-making. In: Academy of Marketing B2B SIG, 23 June 2016 - 24 June 2016, Paris, France. (Unpublished)

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Abstract

Questions concerning the location of a firm’s operations have often sought to explore the benefits and risks of domestic practice versus outsourcing aspects of production to a location abroad. Comparatively lower production costs, tax incentives, and economies of scale are often cited as the main rationale for this strategic decision. More recently however, the popular press or ‘grey literature’ in western markets (i.e. Europe and North America) has identified a shift in focus at the strategic decision making level for manufacturers with respect to their operational ‘location’. This time the focus of current research into operational location is the concept of ‘reshoring’. Reshoring is concerned with “bringing manufacturing back home…” (Gray, Skowronski, Esenduran, & Johnny Rungtusanatham, 2013) from a current location that is not the origin or ‘home’ of the firm. The term is unconvincing as to whether the manufacturing being brought home occurred in a wholly owned facility in an offshore location, or in the factory of an offshore supplier. For example, a firm may have ‘outsourced’ manufacturing operations to an independent supplier, or they may have set up a factory in a foreign location and shifted production to that site to benefit from, for example, reduced labour costs. For Gray et al., (2013) reshoring is fundamentally concerned with the location of manufacturing activities independent of who is performing them. As such ‘location’ becomes the primary decision determinant as opposed to ownership. Such a development signals an interesting development that has implications for offshored manufacturing in the long-term, and shorter-term planning.