I Told You So - 11 February 2023

Early versions of these missives made mention of the, mostly unacknowledged, Achilles Heel of American Bidnezz chasing cheap hands in the Far East: the unit cost of transport of the widgets will eventually dominate the BoM. Well, it has come to pass.

It was January 2022, and Mr. Chan's company, Man Wah Furniture Manufacturing, was confronting grave challenges in moving sofas from its factories in China to customers in the United States. Shipping prices were skyrocketing. Washington and Beijing were locked in a fierce trade war.

Neither pressure is going to be relieved any time soon.

The interest of Chinese manufacturers in Mexico is part of a broader trend known as nearshoring. International companies are moving production closer to customers to limit their vulnerability to shipping problems and geopolitical tensions.

Gee. I guess there's been some (slew of?) B-school reports goading the C-suites into it. Let's go see... (note, many of the B-school reports aren't freely available on the innterTubes, so wish me luck). This is the earliest one that comes up in the search, from 2017. Ha ha, I told you so a lot earlier. And it ain't free, but you can see a precis for no Bongo Bucks.

If we turn to the olde reliable wiki, we find this. The page doesn't date the 'beginning' of nearshoring, but does have the audacity to open the section with:

According to the 1913 New York Times article "Near Source of Supplies the Best Policy", the main focus was then on "cost of production."

This is fun. Let's go find a cite that puts nearshoring into recent perspective... this is from 2014 and, while it is an overview rather than a history, seems a good place to start.

The "game changers" are volatile, escalating oil prices and an imbalance of supply and demand for freight transport services. These realities have led to high transportation costs — high enough to cause companies to make transport-driven shifts in their supply chain strategies.

Finally, the last vegetable for the stew (well... today at least). From the beginning of offshore manufacturing (as different from IT/call center/etc.), I considered it dunderheaded when combined, by the C-suite MBAs, with JIT. The latter was invented/developed in Japan, Toyota in the main. Deming, my other hero (before or after Codd, depending on the phase of the moon) had a hand in the effort, too.

We're all turning Japanese.