Shifting the focus – bringing production back home
Digital Manufacturing, Advanced Manufacturing, On-demand manufacturing, Digital Fabrication, On-demand production. We speak about the same thing - production of components with digital technologies - normally machining and Additive Manufacturing. I'll use Advanced Manufacturing (AM) in this text for simplicity.
America Makes, Canada Makes, Made in the Midlands, Make UK, Made in Britain - official, Finnish Additive Manufacturing Ecosystem, AMUG, NCAM India, Digital Manufacturing Ireland, and many others. These are all organisations and entities that promote advanced manufacturing (additive included) technologies and their use cases to a broader audience. They're driving the know-how, capabilities, processes, adoption, talent, and other crucial dimensions forward. To what end? You may think, why are we investing millions (if not billions) in these abovementioned dimensions?
As a Finnish company, we see this movement stronger than ever. It might have something to do with Trump’s tariffs and the 1340km (810mi) border we share with Russia. As part of the Nordic and Baltic advanced manufacturing cluster and as a part of the European Union, there is much at stake in developing capabilities and increasing manufacturing capacity on our home turf. Especially after seeing that worldleaders’ decisions cannot be predicted and the ongoing trade restrictions with Russia, there is now a need to develop regional and EU-wide capabilities. Also, the war in Ukraine has painstakingly shown how traditional logistic chains and manufacturing value chains are no longer sufficient in times of crisis. Given the current lay of the land, we're wise to invest in re-shoring in advanced manufacturing capabilities.
Re-shoring/Nearshoring manufacturing is breaking the conventional manufacturing value chain and bringing the option to produce parts closer to home. In short, nearshoring and re-shoring manufacturing are strategic decisions to balance cost efficiencies with the benefits of geographical proximity, leading to potentially more agile, resilient, and responsive supply chains. Re-shoring means you bring the production back to the company's/operator's home country, and near-shoring is when it's moving from a distant country to a geographically closer one.
Underlying needs for moving production home vary per industry and interestgroup, but the benefits are easy to generalise. First, look at a few needs for moving the production within a country/state/union region. National needs stem from establishing security of supply, increasing the GDP, and attracting talent and investments. For private and public companies (defence & healthcare), the needs arise from reducing downtimes, maintaining operational continuity, reducing dependency on existing vulnerable and volatile supply chains, and increasing local competitiveness.
What about the benefits of fabricating locally? As mentioned earlier, the main drivers are gaining more agile, resilient, and responsive supply chains. However, there are a few aspects that shouldn't go without mentioning:
- Shorter lead times
- Reduced dependency on distant countries/companies
- Increased quality (in many cases)
- Favourable trade agreements
- Reduced transportation costs
- Reduced carbon footprint (both for logistics and material usage)
Logically, not everything is meant to be re-shored or nearshored. So, how do companies decide which aspects of their products should be brought closer to home? Critical and heavily regulated components are prime candidates, as are components with long lead times or otherwise fragile supply chains. Thirdly, low-volume/high-value components are the usual suspects for Advanced Manufacturing. But finding those components can be tricky.
We at SelectAM can help you in this journey. We'll help you simulate and calculate the suitability and economics for your parts and assemblies for your re- and nearshoring plans. We’ll make sure your re- and nearshoring strategies are done for the right parts, with the right technologies, and for the right reasons – and we can cover the full E2E value chain from identification to deployment. Get in touch to learn more!