If there had been any doubt as to how quickly the global economic landscape - and the market perceptions of it - can change, it would have been erased by events during August and September 2015. Concerns about the Chinese economy and fretting over the next move by the U.S. Federal Reserve triggered massive global market volatility in stocks, commodity prices, and exchange rates. And that turmoil underscored a critical imperative: leaders of companies operating around the world need to move beyond old views and conventional wisdom as they set global strategies.
More than 50 percent of manufacturers plan to enter a new market in the next five years and almost all plan to expand existing sites or open new facilities in countries with existing operations.
E-commerce retailers are starting to add smaller, urban warehouses to their supply chains as the pace of online shopping and delivery transforms distribution demands.
Reshoring is delivering wide-ranging benefits for an increasing number of U.S. manufacturers, who see it as a way to maintain (or regain) global competitiveness. According to the Reshoring Initiative, in 2003 about 140,000 jobs were lost to offshoring. In 2014, for the first time in two decades, the U.S. realized a net gain of 10,000 reshored jobs.
For manufacturers, Mexico is heating up. According to a recent survey from AlixPartners, 41 percent of manufacturing and distribution executives globally believe that bringing production back from overseas – a strategy known as nearshoring – is an opportunity for their organizations, and 86 percent of that group report that they have nearshored or expect to within the next few years.
Foreign direct investment has never been more important in catalyzing growth, whether in the developed or developing world. Although equity markets around the world have largely recovered since the financial crisis, global capital flows have contracted sharply. The Milken Institute's Global Opportunity Index provides policy makers and investors vital information on policies that can best attract foreign direct investment, expand economies and accelerate job creation. The index is also a guide for countries seeking to improve their business environments and attract investors who commit long-term capital, rather than move it around as a fleeting portfolio tactic.
Data from the Reshoring Initiative shows it's primarily southern U.S. states that are seeing the benefits of manufacturing companies returning production from overseas.
Despite a concerted push to expand their overseas presence in recent decades, few companies are ready to build and run truly global organizations and operations, according to a survey of executives conducted jointly by The Boston Consulting Group and IMD business school.
Many mid-sized U.S. cities and other areas now make attractive alternatives to India and other offshore locations for companies considering consolidating finance, IT and other business services operations for shared service or global business services centers, according to new research from The Hackett Group.
