Bring them back home: Insourcing

Escrito el 27 septiembre 2009 por Miguel Aguirre Uzquiano en Economía Global

Moving production overseas is as old as the first colonies centuries ago.  The offshore production was and is attractive due to cheap goods and labour.  But during this global crisis that we are all suffering there is a new trend that consist on bringing the production back where the headquarters are .  Why?  There are many reasons but mainly we can point the following:

.-The consumers are each day more demanding.  How many recalls suffered well know firms due to quality failures? Toys, cosmetics , medical products as cardiac pacemakers etc, there is a wide range of examples just this year.  If the consumers became wary of the products produce with low quality controls , could take a lot of money ad public relations to reverse this situation.

.-Transportation costs: Lately the oil barrel is moving between 66  and 70 USD, far from the prices of just one year ago.  But the crisis make the companies try to cut any cost and when you are in international trade the transportation is one main issue.

.-Intellectual property issues:  Many companies who went to produce to Asian countries due to labour costs, lost millions every year due to the forging and falsification of their products.  Three lines of production work for them and one for the black market.

.-Control over the company’s inventory: The systems of information when a company is dealing with international branches are not exact due to the poor information received from overseas branches .  In the next year produce exact goods demanded is a great issue to reduce costs

.-Buy national products moniker:  As the crisis could be far from ended politics try to encourage and cheer the mood of their voters by developing millions of dollars of public aid but just for local production.

This is just a trend or the Insourcing would become an economic strategy for international firms?


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