Nearshore Americas

Nearshore Attracting Automated Production from US and European Manufacturers

A large majority of manufacturers in North America and Western Europe are considering a shift of production to nearshore locations, with the deployment of robotic automation tools at the top of their agenda.

Rising wages in China and other emerging markets is driving the shift, according to Alix Partners’ annual survey.

In the study, more than 68% of respondents said they are planning to move to the nearshore, up from just 40% in 2015.

Manufacturers are increasingly looking for robotics automation tools to circumvent the labor challenges back home, the report added. Most of them appeared to be optimistic that technology can help them augment – or entirely replace – functions previously performed by humans.

“Companies are also reporting mounting labor challenges, especially when it comes to finding people to fill key manufacturing roles, such as process or product engineers, line operators, and frontline supervisors,” the report added.

In the survey, more than two-thirds said that they have already nearshored in the past three years, or will plan to do so over the next three years.

More than 60% of respondents said they are building relationships with local education providers, 55% are increasing wages to attract additional candidates and 53% have internal apprenticeship programs in place to address the shortages.

But the consulting firm has warned that labor shortages in nearshore locations may lead to higher-than-expected labor costs for manufacturers.

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The nearshoring trend is likely to recreate more than 3 million jobs in the United States through 2022, according to the Manufacturing Institute. But at least 2 million jobs will remain unfilled, because the consulting firm says even the U.S. is facing severe shortages in skilled workers—such as electricians, welders, and pipefitters—who play critical roles in maintaining manufacturing infrastructure.

Narayan Ammachchi

News Editor for Nearshore Americas, Narayan Ammachchi is a career journalist with a decade of experience in politics and international business. He works out of his base in the Indian Silicon City of Bangalore.

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