Is production returning to Finland?

research paper
Heikkilä J.; Martinsuo M.; Nenonen S.; Lindfors K.
Country (if relevant): 
Volume number and page: 
vol. 2016(2)
Journal or media source: 
Complete reference: 
Heikkilä J.; Martinsuo M.; Nenonen S.; Lindfors K. (2016) Is production returning to Finland? Tekes vol. 2016(2)

The Policy Brief reports results of a survey carried out in 2015 to explore the extent of production offshoring and backshoring from Finland and to Finland during the last five years (2010‐2015). The target group consisted of all the manufacturing companies with a minimum of 50 employees. The total number of companies in the target group was 949, and 229 of them participated in the survey. 68 companies out of the 229 respondents stated that they offshored out of Finland and 30 backshored during the last five years. 
According to the survey, the most important reasons for offshoring are labor and other costs. On the other hand, flexibility, quality, lead time and logistic costs are the most important factors when bringing production back. Access to skills and knowledge, access to technology, and proximity to R&D and product development are factors that scored also higher in importance for reshoring versus offshoring.

The survey results indicate that there are differences in certain characteristics of the backshoring companies when compared to the non‐reshoring companies. The backshoring companies’ focal plants are bigger in terms of the number of employees, and they have more production plants in a higher number of international locations than the non‐reshoring companies. Backshoring companies report more often to have a corporate‐ wide strategy for guiding offshoring and backshoring decisions. Backshoring companies also use more external resources (i.e., their direct material and service costs are higher) and, respectively, their direct labor costs are lower than for the non‐reshoring companies. The backshoring companies seem to have pursued certain manufacturing technology innovations more than the non‐backshoring companies, e.g. in the areas of new high‐tech materials and new process technologies. This finding suggests that access to technological innovation can be a factor attracting manufacturing companies to backshore production to Finland.

Global sourcing