The Economist Intelligence Unit: NA Nearshoring Not Likely
With global supply chains comes higher risk, something we learned all too well when the impacts of COVID-19 started hitting our supply chains. The semiconductor shortage fueled further motivation for organisations and policymakers to start carefully considering nearshoring.
However, a new report by the Economist Intelligence Unit (The EIU) that examines the prospects for supply chain reshoring to North America says nearshoring will remain the exception rather than the rule and that North America will not see significant supply chain reshoring in 2021-25.
- North America’s lack of competitiveness compared to Asian economies (the very thing which drove business away) will continue to deter companies and investors.
- Lingering protectionism and cross-border tensions within North America will present another obstacle, complicating options for arbitraging production costs throughout the region.
- These factors will discourage the types of investment required to transform North America into a viable, self-sustaining supply-chain ecosystem.
Costs Remain an Issue
The EIU believes that expectations for developing North American alternatives are overblown, and businesses will continue to favour the convenience, reliability and cost-effectiveness of Asia.
Andrew Viteritti, The EIU’s commerce and regulations lead, says, “North America boasts several advantages—including years of economic integration, a large free-trade area, short travel times and new opportunities for policy coordination under USMCA. However, a number of obstacles will prevent businesses and investors from viewing North America as a realistic production substitute for Asia, at least through the medium term.”
We’re all very well aware of Asia’s competitive advantage of low-cost manufacturing capabilities. The EIU believes Asia’s more successful mitigation of pandemic disruptions will also work in their favour.
Protectionism and cross-border tensions
Even without Trump, protectionism and cross-border tensions will persist, says the EIU, presenting another.
Protectionism and cross-border tensions within North America will present another obstacle and notably complicating options for arbitraging production costs throughout the region.
Mr Viteritti says, “Mr Biden has gone to great lengths to signal that the US ‘is back’ as an international partner, eschewing the ‘America First’ strategy of his predecessor, Donald Trump. However, it is still not clear how Mr Biden will reconcile this approach with his goal of revitalising US manufacturing and jobs.”
Tensions remain between the US and Canada
Despite a new President, tensions remain between the US and Canada over lingering US tariffs. There also are concerns over the rise of nationalist and statist policies in Mexico, which are compromising that country’s potential to serve as a cost-effective production hub for North America, says the EIU.
Remodelling supply chains for nearshoring requires great investment. However, investors will continue to be deterred by these factors and favour Asia’s cost-focused production hubs.
Reflecting Asia’s sustained importance in global supply-chain networks, the EIU forecasts that Asia’s share of global exports will continue to rise between 2021 and 2025, while North America’s share will remain unchanged.
Download the full report https://www.eiu.com/n/campaigns/north-america-supply-chains/
Critiqom land four-year multi-million-pound procurement deal
Critiqom, a Scottish-based communications business, recently announced its ground-breaking multi-million deal, which will see those accessing services through Scottish Procurement given the option to modernise their communications approach.
By providing an increased amount of choice in communications, the company says it will succeed in ensuring a reduced environmental impact linked to mail production.
The Opus Trust Communications company, which is accessed by the likes of local authorities, police, universities, central government, and other public sector bodies, insists that choosing a local supplier to aid in enhancing the efficiency of public sector communications would subsequently speed up its goal to go green.
“This is an opportunity to look at the bigger picture and to use our knowledge to accelerate change for public sector organisations in Scotland,” says Director at Critiqom, Gerry Crawley.
“We know that we can deliver great efficiencies and cost savings by encouraging the public sector in Scotland to adopt a new approach that embraces digital technologies.”
The tender also introduced a second lot, focusing on digital communications and hybrid mail, in an attempt to administer reduced costs for its customers. All services within the framework agreement will also be delivered in-house.
It seems the overall aim for the deal with Scottish Procurement lies with innovating and modernising the communications sector, resulting in lower prices and an increased focus on sustainability.
Who is Critiqom?
Based in Bellshill, Scotland, Critiqom supplies omnichannel solutions for companies, businesses, and organisations, all while claiming to provide innovation and drive engagement simultaneously with reducing the costs of its operations.
Its vision: to become the UK’s multi-channel communication service of choice. But how is it aiming to get there?
Critiqom insists that by spearheading customer communications with partnership and modernisation, they can achieve exceptional levels of service and choice delivered to their clients. By churning out consistently high-quality operations and by generating revenue with an emphasis on sustainability, it intends to achieve the reduced costs in communications that its clients are looking for.
Why sign the deal now?
Increasingly, more and more companies are being put under pressure to ensure their carbon footprint and sustainable strategies are aligned with, or surpassing, competition in their field. As attention is drawn to the climate and concerns arise over the sustainability of large companies in the future, the majority of businesses are battling with time to decrease their impact on the environment and ensure policies are put into place to show their progress.
Crawley states that, where possible, the company aims to provide as little distance as necessary between manufacturing and the recipient. The tender boldly claims it looks to help steer the direction in which organisations think and showcase how digitalising communications can only serve to benefit the economy and environment on a large scale.