International manufacturing relocation - the phenomenon of backshoring

Abstract: Recently, firms have started to bring back once offshored manufacturing activities from far distant locations, an activity referred to as backshoring. The purpose of this thesis is to contribute to the understanding of the backshoring phenomenon by answering four research questions related to different aspects of manufacturing relocation. Thereby, the thesis makes several important contributions to researchers that aim to understand why firms are relocating manufacturing activities, and to practitioners that aim to be competitive in the global market by optimizing their manufacturing network.The thesis is based on the results of five articles from two separate studies. The first study is a survey study aimed at manufacturing plants in Sweden, Finland, and Denmark, with questions related to manufacturing relocations during a five-year period. In particular, the survey captures data about the drivers and benefits of a specific offshoring project and a specific backshoring project, thus providing unique possibilities to compare the two relocation directions. The second study is a literature study, followed by two types of meta-analyses of previously published case studies. The meta-analyses allowed for accumulation of existing knowledge, in an effort to accelerate the progress of the field. There are many potential drivers of manufacturing relocation in the backshoring literature. This thesis presents two different ways of grouping them. The results are similar, and indicate that cost, access to competences and access to market are the three most important drivers to explain offshoring and backshoring. However, firms backshore manufacturing activities for considerably different reasons than they offshore. In addition to the relocation drivers, contextual aspects such as plant size, industry and geography also influence the relocation decision. Interestingly, the results show that there is a causal relationship between backshoring and the previous, related, offshoring activity, which means that the offshoring decision has an impact on the subsequent backshoring decision. After relocation, firms are experiencing different benefits depending on the relocation direction. The results show that drivers and benefits are aligned, which indicates that firms realize the expected benefits from a relocation project. However, if the firm desires performance improvements on a broader scale, there is a need to balance the relocation motivations as no driver alone leads to benefits in all performance measures. Based on the results of the meta-analysis, a framework for backshoring studies was created, that includes all aspects identified by previous literature, and that takes into consideration the previous offshoring project. As such, this thesis presents the first complete backshoring framework that considers offshoring and backshoring together.