June 7, 2015

Keith Knutsson- Trends in Human Capital Investment: Offshoring V.S. Reshoring

Posted in Keith Knutsson at 10:41 pm by Keith Knutsson

“Every leading country has had to gain a comparative advantage in something. From the industrial revolution, the United States eventually gained the comparative advantage in the High Tech sector,” said Keith Knutsson

“Today, the United States and Europe has some of the top entrepreneurs who produce technologies that are changing the world. To develop a comparative advantage in production, China has specialized in low wage workers among other policy initiatives and tight capital management to attract domestic producers to outsource production to China. As China has developed the minimum wage has continued to grow. Since 2008 China’s minimum wage has increased by roughly 226% in 2015,” said Keith Knutsson.

The truth is, there will always be a China, looking to produce things as cheap as possible, but there are many advantages afforded to those who choose to reshore and that is the growing trend. “New Balance reshored production of their shoes to the U.S. and benefited greatly. New Balance was able to restructure production in the U.S. to incorporate greater technology, which allowed them to significantly reduce production to be competitive with import competing firms” said Keith Knutsson.

“Bringing production back to the United States, allowed New Balance to reduce their supply/distribution channel and allowed them to better respond to consumers changing preferences as well as well as a quicker response to retail outlets,” said Keith Knutsson.

Reshoring production the United States will offer more advantages than outsourcing, the key is proper management and restructuring of processes. There is no blueprint for reshoring, every firm has different products, processes, human capital, and many other threats/opportunities. For more information, please contact:

Keith Knutsson

keith.knutsson@gmail.com

www.integraleadvisors.com

twitter.com/keithknutsson

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