A host of societal and economic trends—growing trade barriers, volatile exchange rates, and the erosion of labor-cost benefits in places like China—are pushing more companies to move their overseas manufacturing plants and production closer to large end-user markets. But obstacles to this general movement, known as "nearshoring," remain. Among the most significant: a lack of skilled labor.
A recent report by the analyst firm AlixPartners, "Homeward Bound: nearshoring continues, labor becomes limiting factor, and automation takes root," addresses this challenge and investigates some potential solutions.
AlixPartners conducts an annual survey about nearshoring that polls manufacturing and distribution companies that serve North America and Western Europe. In the 2016 survey, 69 percent of respondents said they are considering nearshoring their production facilities. One thing that may be holding them back, writes the report's author, AlixPartners Managing Director Foster Finley, may be the lack of skilled labor, particularly for key manufacturing roles such as process and product engineers, experienced line operators, and frontline supervisors.
For many respondents, robots may offer a way around that roadblock. Two-thirds of respondents indicated that they plan to invest in robotics and automation technologies. More than half (52 percent) said they believe the cost of robots has fallen to the point where investment in the technology is now favorable, and 47 percent said that robots are more capable of performing certain tasks, such as handling apparel, than they were in the past.
Yet the need for skilled labor will not completely evaporate. Manufacturers will still need employees who can oversee, service, and maintain this type of automation. To acquire this increasingly important talent base, the report recommends, manufacturers should consider building relationships with educational institutions, investing in developing their own employees' skills, and locating closer to population centers that possess people with the required skills.