home  › Business and economy

“Supply chain” driven reshoring brings 21 productions back to Emilia Romagna

by Ilaria Vesentini

Logistical costs, the “Made in” effect and improved client service are the main factors fueling the “reshoring” phenomenon of Western companies during these years of economic crisis.

And Emilia Romagna, with 21 decisions (taken by 13 companies) to bring production back to Italy that was previous delocalized, is second only to the Veneto (with 36 episodes) among Italian regions.

“Reshoring is still a niche phenomenon, cutting across sectors and driven by a variety of reasons, linked above all to changes in the economic context and in company strategy, but also in Emilia it is strictly correlated to the strength of the supply chain and districts in terms of concentration of abilities and flexibility,” said Paolo Barbieri, professor of Company Sciences at the University of Bologna.

Barbieri is working in the Uni-Club MoRe Back Reshoring research group, along with colleagues from the universities of Ferrara, Parma, Modena and Reggio Emilia, on the subject of back – and near- reshoring. It presented its first research on Emilia during the end of year conference on the 2016 regional economy.

“The North East is a lead player in the phenomenon, with 45 cases out of 121 in Italy, 376 in Europe and 728 in the major industrialized countries, involving the return of production to one’s home country or bringing it closer to the headquarters,” Barbieri said. “A key role in determining the choice to return is played by the productive supply chain at the local level, capable of guaranteeing those advantages in terms of quality, control, authenticity, and proximity to the client that cannot be assured by transferring processes to sites in Asia or Eastern Europe, the two main areas where Italian companies have delocalized,” he said.

Without claiming to be exhaustive, seeing as there are no official data bases, the analysis is based on 21 productive relocations in Emilia, of which 12 are in the wider metals and machinery sector, and eight are in clothing and footwear, two sectors where Emilia’s subcontracting is unbeatable for its capacity to guarantee innovative products, tailored to the client and of extremely high reliability thanks also to the “Made in” label.

Barbieri remembers the cases of Argo Tractors (an agricultural machine maker, which brought processes that had been moved to France and Britain back to the high tech district of Reggio Emilia); Beghelli (a lighting and electrical systems company which came back from China also to protect the local workforce); Giesse (producer of aluminum hardware, which has managed to cut the cost gap with China through the automation of processes, and has favored services and logistics efficiencies); Wavel (an electric bicycles maker, which preferred the short supply chain and the control of innovation to the initial cost advantages of the Far East.

The “Made In” effect and improvement of client services are the two main reasons that drove Emilia Romagna firms to make production local again,” said Barbieri. “These were followed by factors such as the global economic crisis and therefore geopolitical uncertainty (25% of the multiple choice answers), the overall reorganization of the company strategy (another 25%) and the focus on product and process innovation that calls for close links between production and research (20%),” he said.