Jargon Watch: nearsourcing

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Due to increased shpping costs: the cost of containers, fuel, insurance, improved worker’s conditions in China and increasing costs for lines of credit some are wondering whether manufacturing jobs will be located closer to the market for a number of products. This move back to local manufacturing has a name: nearsourcing according the New York Times.

Some companies have been very smart in product design and process engineering so have managed to nearsource rather than outsource, a great example of this is the shoe company New Balance and hi-fi company Schiit.

Whether this will become a real trend though is a bigger question, many post-industrial countries like the UK have their manufacturing eco-system so hollowed out that they couldn’t take advantage of nearsourcing if they wanted to as they no longer have the knowhow, staff, plant, electrical grid, railways and base industries to take advantage of it.

If one thinks about the UK, the government had to give 50m GBP to INEOS in 2003 in order to keep chlorine manufacturing going in the UK. Chlorine is one of the basic chemical building blocks required for modern industry and very hard to transport due to its aggressive chemical nature. Could the UK become a shadow of what it used to be from an industrial point-of-view? I don’t think so.