Five years of disruption marked by trade wars, the pandemic, geopolitical tensions, and severe supply bottlenecks have profoundly redrawn the map of where global companies manufacture and source goods. A new report released today by Boston Consulting Group (BCG), titled Harnessing the Tectonic Shifts in Global Manufacturing, underscores the magnitude of these shifts.
Based on a survey of North American manufacturing executives and an analysis of global trade patterns, the report reveals that more than 90% of manufacturing companies in the region have moved at least some of their production or supply chain in the past five years. Of those, half reported that they had shifted more than 20% of their manufacturing and supply chain spending. Further, owing to ongoing geopolitical uncertainties and high US tariffs, more than 90% of respondents said that they plan to make similar moves over the next five years.
Thanks to their deep labor pools and growing scale and capabilities across diverse industries, Mexico, India, Southeast Asia, Turkey, and Morocco are rapidly emerging as future export powerhouses. For example, from 2018 through 2022, US goods imports declined by 10% from China in inflation-adjusted terms, but they rose by 18% from Mexico, by 44% from India, and by 65% from the ten countries of the Association of Southeast Asian Nations (ASEAN).
“Changing geopolitics, the evolution of relative cost structures, more frequent and high-impact disruptions, and the push for decarbonization, among other factors, will lead to a massive restructuring of global supply chain networks over the next decade,” said Ravi Srivastava, global leader of BCG’s Operations practice and a coauthor of the report. “Companies need to fundamentally rethink their manufacturing and distribution networks, build capabilities in new geographies, leverage government incentives, and establish new relationships across the supplier ecosystem to enhance their competitive advantage and protect…
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