Reshoring and the new normal

Reshoring and the new normal

Rising transport prices are slowing down shipping and delivery operations, resulting in higher prices for goods from Asia, particularly China and the Far East. How much is the consumer be willing to pay to have a Made in Europe or Made in Italy product?

Driven by the new normal dictated by the health crisis, companies are reviewing their business models in terms of sustainability and digital. The supply chain looks towards European and Italian production.


The new edition of HOMI will also focus on the current issues of reshoring, domestic production and Italian know-how.


So what scenarios are emerging in terms of production after globalisation and relocation? Rising transport prices are actually causing slowdowns in shipping and delivery operations and companies are looking for closer distribution partners, breaking their deals with foreign suppliers. The price increase involves goods originating from Asia, China and the Far East in particular (we’re talking about price increases of up to 150%).


In this new landscape, a new emphasis is being placed on local production, the ‘Made in’ label and appreciating local areas, specifically the specialisations and communities of Italian region. The onus is on them to continue boosting creativity and Italian brands. Meanwhile, key players should rethink the criteria for reshoring in Europe and Italy. All in the name of an artisan revolution that is already underway.


In the words of Clemente Bugatti, Managing Director of Ilcar di Bugatti : “In terms of reshoring, we're picking up on some mixed market trends. There are many major chain stores, particularly in Italy, that show a desire to be able to buy products that are made in Italy.


This definitely has positive impacts, first and foremost, because it leads to buyers favouring Italian suppliers and products, acknowledgement by accepting the premium price associated with these products, which is absolutely not comparable with Asian prices.


Secondly, it leads Italian manufacturers to reopen branches that, in some cases, have been closed for years, bringing back the culture of know-how, a highly important heritage that’s at risk of disappearing.


In spite of this phenomenon, for certain product types — and not just a few — buyers for these chains think in terms of perceived retail price thresholds, which have been continuously lowered over the years in order to gain market share. This has meant that they can’t/don’t want to go above certain “psychological” prices, and therefore ask Italian suppliers for prices that are no more than 5% higher than Asian prices.


As a result, sometimes small producers are driven to make their product at the price specified by buyers, not realising that unhealthy dynamics are triggered in the long run as, if these producers are not earning enough, they cannot reinvest and grow.


In order to restart production for certain products that haven’t been made in Europe for decades, the key players in the chain need to share common values, from producers to distributors and consumers. And with a clear understanding that manufactured products, increasingly sustainable and made in Italy, cost more than those made in emerging economies and inevitably have a premium price".