WHAT: In February 2021, Swedish optic company Synsam announced the relocation of its manufacturing activities from China to Östersund – a 64,000 inhabitants municipality – in Sweden, thus creating 200 jobs. This happened at a time when “backshoring” – the process of bringing productive activities “home” – made it to the top of the European political agenda. With COVID-19 driven supply shortages, and trade rivalry between China and the USA, backshoring is seen as a way to secure and ensure the resilience of value chains from exogenous shocks such as pandemics, extreme weather events, and political conflicts, while also dealing with concerns around technological sovereignty. The French government, for example, as part of its recovery plan has launched an “open call for relocalisation projects” backed by a 1 billion Euro subsidy envelope. In terms of competitiveness, manufacturing costs are now less relevant for companies, especially in light of the environmental agenda.
SO WHAT: COVID-19 has highlighted a number of issues of global supply chains and placed unprecedented pressures on the security of companies and nations. If appropriate incentives are in place, the backshoring of production plants won’t necessarily affect economic growth and employment. While many companies use relocations as opportunities to automate manufacturing process, they could also support small and rural municipalities’ attractiveness strategy. Becoming an attractive location for remote workers may become a viable strategy to also attract backshoring activities, as investments increasingly follow talent and workforce.