Reshoring production, restoring jobs
Many Norwegian companies are now moving outsourced production back home
M. Michael Brady
Around the turn of this century, countless companies in high-cost countries, as in North America and Western Europe, sought to stay competitive by moving production to low-cost countries, as in Eastern Europe and Asia. The trend, called offshore outsourcing, now is reversing in some sectors.
The new trend, called reshoring production, has been driven by two ongoing shifts. First, robotics and smart production have cut the amount of manual work involved in making many items. Second, wages have recently risen dramatically in many low-cost countries. So reshoring production now is prominent in sectors in which wage levels no longer are decisive in overall production costs.
So in Norway, as in the USA and other high-cost countries, high-tech production now is returning home, while low-tech production remains abroad. That situation is most evident in mechanical production. For example, I.P. Huse, located on the island of Husøy near Ålesund, is a world leader, with more than 90% of the global market for giant winches (pictured here) fitted on Anchor Handling Tug Supply (AHTS) vessels and tugboats. It now has moved production back to Norway from Russia, Ukraine, and the Czech Republic.
Ten other companies also have recently moved production back to Norway, including Raufoss automotive suspension systems from China, Kleven Shipyard hulls from the Baltic countries, and Sleipner Motor small boat stainless steel winches from China. These successful cases of reshoring production back to Norway suggest that it works well in high-expertise, specialist sectors. But there’s considerable disagreement as to whether it can be more generally applied to revitalized slumping manufacturing industries in many OECD countries (further reading, below).
“Homesourcing, Ny trend: Norske bedrifter flytter hjem produksjonen fra lav kostland” (Homesourcing, New trend: Norwegian companies moving production home from low-cost countries), by Tore Stensvold, Teknisk Ukeblad, June 20, 2016, article at www.tu.no/artikler/ny-trend-norske-bedrifter-flytter-hjem-produksjonen-fra-lavkostland/348711 (in Norwegian).
Reshoring: Myth or Reality? by K. De Backer et. al., OECD Policy Paper, January 26, 2016, DOI 10.1787/5jm56frbm38s-en (in English; also available in French).
This article originally appeared in the Aug. 12, 2016, issue of The Norwegian American. To subscribe, visit SUBSCRIBE or call us at (206) 784-4617.