Greenshoring: Location Decisions in Reverse
How sustainability impacts reshoring in the automotive industry
Birgit Engler | Dr. Tim Dereymaeker
Aug 2022
| Strategy Paper
| English
Greenshoring: Location Decisions in Reverse
How sustainability impacts reshoring in the automotive industry
Decisions on location are among the most discussed topics at companies. The majority of European production sites have been relocated abroad since the 1980s. Lower costs and the transfer of risks to suppliers were the main reasons for these strategic offshoring decisions. Today, there are numerous reasons for moving offshore manufacturing sites back to industrialized countries–so-called "reshoring". Sustainability has become an important driver in this process. The aim is to reduce CO2 emissions in the long term, secure supply chains and drive innovation. Increasing a company's competitiveness and attractiveness to its customers, employees, and society are also important factors in the location decision.
What role does sustainability play in reshoring and how do leading companies in the automotive industry assess this trend? The new study from Porsche Consulting provides information on how sustainability and reshoring can be combined in the best possible way.
Management Summary
- Reshoring—a company’s voluntary decision to bring previously offshored manufacturing activities back or close to the home country—is gaining momentum and so is sustainability
- When deciding on a manufacturing location, automotive suppliers are oriented towards the OEM's location to increase geographical proximity and efficiency
- Compared to public corporations, family-run businesses attribute a higher importance to sustainability as economic aspects, or stakeholder expectations drive them to a lesser extent
- With the introduction of a carbon price, particularly logistics and transportation are a key driver for the reconfiguration of supply chains to reduce carbon emissions and penalty payments
- Automotive suppliers also move manufacturing sites closer to the OEM to avoid delivery failures and to be protected against future pandemics or other disruptive events such as with Covid-19
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