Nearshoring

November 2018

Following decades of the radical outsourcing of textile manufacturing to distant lands with comparatively low labour costs, the tide is now beginning to turn. According to the recent McKinsey study “Is apparel manufacturing coming home?“ fashion and textile manufacturing will in future increasingly return to Europe. The reasons for this include advancing automation and rising wages in Southeast Asia. Bringing production closer to home has many benefits: so-called nearshoring allows companies to be more agile in their response to product trends and customer needs, reduce surpluses, and minimize lead times on the production of apparel. A pair of jeans manufactured in Bangladesh or China, for instance, takes on average around 30 days to transport from Southeast Asia to Europe. But if those jeans are produced closer to Europe, for example in Turkey, then the delivery time is cut to just three to six days. If one adds all the costs for production, transport and customs duties, then the jeans from Turkey cost 3 per cent less than a comparable model from the Far East. Nearshoring has advantages over conventional outsourcing in respect of sustainability, too. In addition to the savings on costs and emissions due to shorter supply distances, the proximity to production improves transparency in the supply chain.

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Additional information is available here:

https://www.mckinsey.de/publikationen/is-apparel-manufacturing-coming-home