IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 46, NO.

2, SECOND QUARTER, JUNE 2018 87

Reshoring and Industry 4.0: How

Often Do They Go Together?
—ALESSANDRO ANCARANI Abstract—This paper investigates the linkages between the reshoring of
DICAR, University of Catania, Catania, manufacturing to high cost countries and the adoption of technologies labeled
95125 Italy Industry 4.0. Using a large database of reshoring initiatives to either the U.S.
or Europe, results show that the adoption of technologies, such as robotics
—CARMELA DI MAURO and three-dimensional printing, is relatively limited among reshoring
DICAR, University of Catania, Catania, companies, and often confined to reshoring strategies where the cost focus
95125 Italy
that originally motivated the relocation offshore is still retained. Reshoring
firms with quality-oriented business strategies, and for which cost containment
is not the top priority, engage in capital investment in new technologies mainly
when they are involved in new product development.

Key words: Reshoring, strategy, Industry 4.0, 3D printing, automation

IEEE DOI 10.1109/EMR.2018.2833475

1. INTRODUCTION labor cost gap between China and

I N the last thirty years, offshoring –
the relocation of production and other
value chain activities to low cost
countries, has emerged as one of the
most widespread strategies
implemented by Western
manufacturers in order to maintain or
to improve competitive advantage. In
the last decade, while offshoring has
continued, many offshore operations
have been relocated back to their
home countries or in their proximity,
giving rise to the so called “reshoring”
of manufacturing (Ellram et al., 2013;
Fratocchi et al., 2016; Kinkel, 2014).
Although reshoring is not a mass
phenomenon, it is a momentous
topic, not only because of the political
emphasis placed by some
governments on protectionism and
anti-globalization actions, but also
because reshoring has emerged as a
bottom-up initiative in those countries
where there is no institutional
pressure or support for reshoring.
Because of policy and managerial
interest, research on reshoring is
steadily increasing (Fratocchi et al.,
2016).
Western countries, and to rising
logistics costs (Kinkel, 2014; Simchi-
Levi et al., 2012). Coordination costs
and low product quality offshore
(Ancarani et al., 2015), the value
customers attribute to “made in”
products (Ancarani et al., 2015;
Grappi et al., 2015), need for greater
flexibility (Kinkel, 2014) and customer
responsiveness (Moradlou et al.,
2017) have also been emphasized.
The relocation of labor-intensive
industries to high cost countries may
be encouraged if labor-saving
production technologies are adopted
to complement the relocation. Driven
by advancements and falling costs in
digital technology (Fitzgerald et al.,
2014; McAfee et al., 2012), recent
progresses in robotics and
digitalization contribute to
manufacturability and producibility,
reduce time and improve quality in
production processes (Arlbjùrn and
Mikkelsen, 2014). Despite the
importance of this topic, the
investigation of the links between
reshoring and technological
innovations of production processes
has been neglected so far.

Many contributions have linked Currently, evidence on the extent to

reshoring initiatives to the shrinking which reshoring manufacturers adopt
88
new production technologies is
scarce. Building on an extensive data
set of reshoring initiatives obtained
from secondary sources, this article
sets out to investigate the following
research questions:
RQ1. To what extent do
reshoring manufacturers adopt
Industry 4.0 and other labor
saving technologies as part of
their return to high cost
countries? Is reshoring possible
without altering the labor
component of production?
RQ2. What are the drivers of
reshoring strategies for
manufacturers that are
associated with the adoption of
Industry 4.0?
RQ3. Is there a tendency
towards insourcing (i.e. in house
production) of activities from low
to high cost countries when
reshoring takes place? If so, is it
more evident for firms investing
in new production technologies?
The paper is organized as follows.
Building both on interviews with
senior managers of reshoring
companies as reported by press
sources and on scholarly research,
Section 2 discusses the possible
rationale for the adoption of robotics
and other Industry 4.0 technologies
for reshoring manufacturers. Section
3 presents the methodology and the
database. Section 4 addresses the
research questions, by providing
evidence on the adoption of
Industry 4.0 by reshoring firms
and crossing it with business
strategies underlying reshoring
and governance modes. Section 5
summarizes lessons to be learned
for companies evaluating reshoring
initiatives and for policy makers
exercising institutional pressure
on national companies to reshore.
Section 6 concludes with open
questions and suggestions for
future investigations.
IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 46, NO. 2, SECOND QUARTER, JUNE 2018
2. RESHORING AND
AUTOMATION
There is agreement among scholars
that reshoring entails not simply a
relocation of operations, but “a
reconfiguration of systems” (Mugurusi
and de Boer, 2014, p. 275). System-
wide changes concern the transfer of
critical resources from the offshore
location to the home country, the
acquisition of new resources, the
restructuring of the supply chain, the
change in production processes and
products and the ensuing change in
the degree of control. Manufacturers
evaluating reshoring have to assess
the challenges of the disintegration
(e.g., closing down of existing
contracts and relations), of the
relocation (actual dispatch of
activities from offshore), and of the re-
integration stages (relocated activities
are linked to remaining value chain
activities) (Jensen et al., 2013). The
adjustments involved make reshoring
a complex decision.
The rapid technological progress has
opened up a range of new
opportunities to address or bypass
some of the challenges tied to the
relocation to high cost countries. The
“Industry 4.0” label is often used to
refer to a high-tech strategy
encompassing the integration of
robotics, 3DP, big data analytics and
IoT (Gress and Kalafsky 2015;
Hofmann and Ru €sch, 2017). The
higher maturity of ICT and falling
costs of hardware and software have
led to an accelerating pace of design
and manufacturing capabilities
enabled by these technologies,
making their adoption suited to
simultaneously handle demands for
cost-efficiency, quality, flexibility,
adaptability, and sustainability.
Why reshoring manufacturers may
want to engage in the adoption of
robotics and other Industry 4.0
technologies? In order to understand
it, we posit that investment in new
manufacturing technologies is strictly
connected to the business strategy
underlying reshoring. Recent
research points to the fact that a clear
strategic intent drives reshoring
initiatives (Di Mauro et al., 2018;
Robinson and Hsieh, 2016). By
classifying reshoring firms based on
typical business strategies (cost-
oriented, flexibility-oriented, and
quality-oriented), we try to
conceptualize why and how reshoring
manufacturers may embrace specific
Industry 4.0 technologies according
to the business strategy.
2.1. Cost-oriented reshoring In
the last thirty years, production has
been offshored (and often
outsourced) to low cost countries in
order to exploit the advantages of
economies of scale and low labor
costs. However, the recent closing of
the labor cost gap between the US
and China, rising costs of transport
and of inventories, falling costs of
energy in the US (Simchi-Levi et al.,
2012; Tate, 2014), and quality issues
with products have all reduced the
location advantages of some low cost
countries. According to Manning
(2014), external challenges that are
beyond the control of the organization
(e.g., adverse changes in labor or
other production or transport costs)
are more likely to lead to the
relocation decision, with respect to
internal challenges (e.g., decreased
productivity, loss of managerial
control), which are more likely to be
tolerated or mitigated without
relocation.
In this light, reshoring firms may find
the new generation of automated and
digital technologies “equalizers” of
location costs that may render the
return of manufacturing to high cost
countries feasible and sustainable in
the medium-long term, by reducing
the necessary labor component,
improving productivity and reducing
scraps (Bals et al., 2016).
The following statements from senior
managers illustrate the fact that
RESHORING AND INDUSTRY 4.0: HOW OFTEN DO THEY GO TOGETHER?
robotics is considered a necessary
condition for reshoring for cost-
focused companies.
“We can’t just blow up our cost
structure; the only way to make it
work in America is with robotics.
(Monster Moto President, Interview).
“In Europe robots and automation are
the driving forces of moving the
production home, as they keep the
payroll down,” (vice president of the
Confederation of Danish Industry,
Robotics Business Review,
December 29, 2016).
“We wanted to accomplish two things
with the $35 million investment:
modernize our production facility, and
bring manufacturing that was being
done in China back to Montreal. The
goals were in fact related—we
needed new injection molding and
counting equipment to make it cost-
effective enough to justify reshoring
production.” “We were able to come
back to Quebec in large part because
today’s automated counting
equipment made it possible. We’re
also closer to most of our market
here, which saves transport costs,
and much closer to our design center
in Montreal.” (Jean-Francois Albert,
vice president of manufacturing of
Mega Brands, a Canadian children’s
toy company).
“Automation is the great equalizer.
Automation allows us to take
products and move them to other
places in the world – places like Fort
Worth, TX” (President of Flextronics’
High Velocity Solutions, GeoCache,
July 15, 2014).
2.2. Flexibility-oriented
reshoring Other firms are
relocating to high cost countries not
so much because of the falling cost
advantages of low cost countries but
because the growing demand for
customization makes flexible
production (in terms of low volumes
and variety) and shorter value chains
advantageous. Firms that have
increased product variety have
enjoyed a growing aggregated
demand for their products, while
facing a falling demand and
increased sales volatility for individual
variety (Cachon and Terwiesch,
2012). However, variety increases
logistics costs, because the
production unit has to deliver each
product in smaller batches and retain
extra inventory to account for
unforeseen variation in consumer
demand across varieties.
By lowering the costs of flexible
production (Lu, 2017) and making
variety affordable, robotics may be
beneficial for reshoring initiatives with
flexibility oriented strategies. Other
technologies such as 3D printing are
already changing the business model
of global logistics companies, by
turning them into co-creators of
products with key customers, and
allowing customization at point of
delivery.
The following case illustrates the
benefits of reshoring and automation
for a flexibility-oriented firm. For
OtterBox, a producer of tablet and
phone cases, time to market for
releasing and refreshing products has
become much faster than a decade
ago and this has been one of the
motives for moving some of its
production to the U.S. “In a very fast-
flowing market, where there’s lots of
new devices released on an ongoing
basis, being able to have your
product available on the first day that
the smartphone is available in the
store is pretty critical to our business”
“With some automation and
manufacturing techniques, you can
come pretty close to being able to
manufacture competitively” (Otter’s
supply chain director. The Denver
Post, October 12, 2012).
2.3. Quality-oriented
reshoring Quality-oriented
reshoring is generally closely
associated with product upgrading,
89
which holds when firms move into
more sophisticated product lines, with
an increase in the overall knowledge
content/value added of operations
(Humphrey and Schmitz, 2002).
Product upgrading not only increases
the value-added of operations but
also implies that operations are more
likely to be coupled with other
functions, such as R&D and
marketing, therefore requiring cross-
functional information exchange and
collaboration. In this instance,
reshoring may represent the rational
solution, because of coupled
production-development systems and
buyer-supplier interdependence in
new product development (Ketokivi
et al., 2017).
The words by John Shook, a
manufacturing expert and CEO of the
Lean Enterprise Institute, in
Cambridge, Mass., aptly summarize
the advantages for innovative firms to
bring production back: “There was a
herd mentality to the offshoring”, “but
it was also the inability to see the total
costs—the engineers in the U.S. and
factory managers in China who can’t
talk to each other; the management
hours and money flying to Asia to find
out why the quality they wanted
wasn’t being delivered. The cost of all
that is huge.” “But many of those
hidden costs come later. In the first
blush of cheap manufacturing, it’s
easy to overlook the slow loss of your
own skills, the gradual
homogenization of your products, the
corrosion of quality and decline of
innovation”.
These companies may not benefit so
much from robotics but rather from
the adoption of 3D printing or cyber-
physical systems connecting
production and development. An
example is Thinklabs, a company
producing stethoscopes. The
company outsourced production to
China in 2003. “China is the default
choice if you have a completed
product design ready for production,”
claimed the firm’s CEO in an
90
interview. Meanwhile, by fall 2013, the
CEO was convinced that, with careful
design, they could mass-produce
stethoscope parts using 3D printing.
This would make the entire design
process software-driven, and
significantly increase design and
production flexibility. Thinklabs
started manufacturing in the US in
January 2014. Workers 3D print
components in house, and perform
final assembly and electronic testing
prior to packaging. “I wanted the
flexibility to design new products and
develop them rapidly. This ability to
innovate on-the-fly enables us to
expand our customer base to meet
other specialized health care needs.”
Advantages for innovative companies
will further increase as 3DP
technologies mature (Deloitte, 2017),
as the following example illustrates.
WC Bradley, a sixth-generation
company, produces outdoor torches,
wax candles and indoor oil lamps.
Until 2013, it built in China but has
since brought production back to
Wisconsin by investing in a $22,000
3D printer. Ron White, director of
engineering at Lamplight, says on
April 4, 2014 “The in-house
prototyping costs a little more than
using Chinese prototypes, but the
quality is better and the close
proximity to the firm’s engineering
and design teams brings time and
creativity benefits.”
However, if the key benefits of the
value-focused strategy consist of
the possibility of charging a
premium price and gaining higher
margins, then process innovation
needs not accompany the reshoring
initiative. Many reshoring initiatives
in the fashion and textile industry
return to high cost countries seeking
highly skilled workers and the
possibility of boasting the “made in”
label on their products. Don
Rongione, the CEO of Bollman Hat
Company, argues in favor of the use
of old machinery to produce the
famous Kangol hats:
IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 46, NO. 2, SECOND QUARTER, JUNE 2018
“It is extraordinarily difficult to learn European high-end fashion
how to use the old machines for producers moved production
producing our hats and they cannot offshore, thereby underestimating the
be replaced. Through a combination impact of this decision on consumers’
of state grants, online fundraising and perceptions of product quality and
company investment, we have demand for “made in” products. In the
bought and shipped the Kangol last five years, some of them have
knitting machines from China to repatriated production. A well-known
Adamstown. While some Kangol hats case concerns Burberry in the United
are still produced in offshore facilities, Kingdom: “For a company whose
U.S. based production looks brand image is so closely tied
increasingly attractive”. “Britishness” UK manufacturing plays
a part in its brand currency.”
The above discussion argues that, (Business of Fashion, 2016).
whatever the business strategy
underlying reshoring, returning Another case illustrates the problem
companies may benefit from the of “hidden costs” of offshore
adoption of new design and production. The president of Dazor
production technologies as part of Manufacturing Corp. St. Louis, a
their relocation. Table 1 summarizes global manufacturer of professional
the relation between strategies, task lights, lamps, and digital
motives for investment, and microscopes, tells the story of his
technologies sought. company’s offshoring and
subsequent return home as follows:
2.4. Strategy or failure? Although “We needed to look for ways the
the above discussion suggests that company as a whole could pull costs
reshoring initiatives represent out of the product, and one way was
purposeful, strategy-led relocations, to outsource a number of the
in some cases they may constitute operations that we historically had in-
the correction of prior, biased, house”. However, the company soon
offshoring decisions that the firm found out that “The indirect costs
made due to lack of knowledge about associated with holding larger
the foreign destination, inability to quantities of inventory, the constant
accurately quantify some important communication issues, and
location-specific factors, and noncompliant parts for which you
suboptimal decision-making process may not receive credit are all
(Gray et al., 2013; Kinkel and Maloca, significant variables in a total cost
2009). Both quality-oriented and cost- equation” (JobShop, 2013).
oriented value chains may fall into the
reshoring “failure-correction” How to tell “reshoring as strategy”
category. For instance, some from “reshoring as failure of
Table 1. Reshoring Strategies, Rationales for Capital Investment, Technologies
Reshoring Rationale for investment Technologies sought
business in technology embodied in
strategy capital assets and/or ICT
Cost-oriented
Reduction of labor component Robotics

Increase in labor productivity

Reduction in scrap and re-work
Flexibility-oriented
Customize at low costs Robotics, 3DP

Achieve cost-effective flexible production

Customize at point of delivery
Quality-oriented
Rapid prototyping 3DP, Cyber-Physical-Systems,

Effective integration of design, Digitalization integrating buyer
development, and production and supplier

Buyer-supplier integration in
new product development
RESHORING AND INDUSTRY 4.0: HOW OFTEN DO THEY GO TOGETHER?
offshoring”? The length of stay
offshore provides hints. Plausibly,
firms will try to reverse mistakes as
quickly as possible, so that short
offshore stays may signal mistakes.
However, once firms have destroyed
their competences and supply base
at home, the return home may take a
far longer time than it took to offshore.
For Dazor Manufacturing Corp. “It
took about five years to return
production back to the United States
after the Chinese price mystique
quickly faded”.
2.5. Reshoring, robotics, and
insourcing One of the
reasons why reshoring companies
may resort to technology lies in the
destruction of skills and of supply
chains created by the offshoring
wave. Actually, one of the main
challenges reshoring companies face
is to find suitably skilled employees or
suppliers.
“When business picked up after the
great recession, companies couldn’t
get China to deliver goods fast
enough”, they explain at FANUC
America, Rochester Hills, Michigan.
As growing concerns over intellectual
property security in China, as well as
a desire for greater pushed firms to
reshore, these companies found
domestic suppliers’ workforces had
withered in the interim. ‘We need to
highly automate our factories,. . .,plus
there was a big labor shortage.”
In the same vein, “The lack of skilled
workers interested in manufacturing
is “a massive concern” for Todd
Shelton, an East Rutherford, N.J.-
based clothing manufacturer.
Manufacturing workers “can’t just
zone out on Facebook but are
committed to a task all day”.
On the one hand, reshoring firms
return to a country where some labor
competences may no longer exist
and where suppliers have moved
offshore. In house process
automation allows bypassing both
issues, assuming those labor
competences can be substituted by
machines. On the other, especially in
the case of small and medium
suppliers, their limited digital
capabilities may severely limit the
degree of system integration allowed
by Industry 4.0 technologies, even in
case of extensive investment by the
buyer (Schupp and Rehm, 2018).
3. METHODOLOGY AND SAMPLE
In order to answer the research
questions we set forth and to search
for evidence of the links between
reshoring strategies and investment
in Industry 4.0 technologies, we used
data concerning 840 reshoring
initiatives, and obtained from
secondary sources (newspapers,
magazines and other web sources).
Cases were identified by searching
for specific keywords (e.g., reshoring,
backshoring, manufacturing
insourcing) on press archives and the
main internet search engines. The
database contains information on the
industry the firm belongs to, size
(whether small, medium or large),
year of reshoring, governance mode
both in the offshore and inshore
location (whether insourcing or
outsourcing), and main motives
underlying the reshoring initiatives.
The industries that feature
prominently among reshoring firms
are Textile and Apparel (17.0%),
Electronics (14.3%), Machinery and
metal parts (16.9%), and Automotive
(11.9%). The sample is made up of
large (52%), medium (23%), and
small companies (25%). Half of the
companies reshore from China
(50%). In terms of governance mode
at home, most firms choose to
produce in house (79%), rather than
source from external suppliers.
Consistent with previous literature
findings, frequent motivations for
reshoring are quality issues with
offshore production and suppliers
(21.2%), the importance attached by
91
customers to “Made in” products
(18.3%), rising logistics costs (20.2%)
and total costs of sourcing (20.0%),
long delays in delivering to markets
(19.9%), and need to produce in
proximity of customers (19.4%). In a
significant number of cases,
reshoring initiatives are part of a
global reorganization of the firms’
network of operations (18%). In some
cases, and especially for US firms,
institutional pressures either in the
form of public sector financial support
for relocation (12%), or pressures
from large business buyers (as in the
case of Walmart) (6%), have favored
reshoring.
With respect to new technologies in
association with reshoring, we
identified 115 cases explicitly
claiming the adoption of robotics and/
or 3D printing. Among these, 66 firms
reshored to USA, 47 to Europe, one
to Canada, and one to Australia. Most
of them are large firms (53) but
medium (24) and small firms (38) also
feature.
4. FINDINGS
Below, we report the main findings
from the analysis of the data
collected. Findings are organized in
order to provide answers to the three
research questions of the paper.
RQ 1 – Do reshoring firms adopt
Industry 4.0?
Our first research question asked
whether reshoring per se gives rise to
capital investment in automation,
3DP, and other technologies of the
Industry 4.0 family. Within our
database, 13.7% of reshoring
initiatives explicitly refer to
automation and/or additive
manufacturing. No other technology
usually labelled as Industry 4.0 (e.g.,
IoT, digitalization) is mentioned
explicitly in the original sources but,
given the complementary among
some of these technologies, their
92 IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 46, NO. 2, SECOND QUARTER, JUNE 2018

adoption cannot be ruled out (De
Backer et al., 2018).
Matching this proportion with
information on firms adopting Industry
4.0 in the survey of manufacturing
companies in Europe and the US
carried out by the Boston Consulting
Group in 2016, the two proportions
appear to be roughly comparable
(19% in Germany and 16% in the US
in the BCG survey). Tentatively,
reshoring companies do not seem to
make use of capital investment in
technology more often than generally
done in manufacturing. This state of
things may only be temporary, of
course. Actually, 9 cases concern
reshoring initiatives between 2005
and 2009, 40 cases between 2010
and 2013, and 66 cases from 2014
onward, thus supporting the idea that
reshoring associated with the
adoption of new technologies is
gaining momentum.
perceived complexity of controlling
offshore operations, and those
motivated by the need to speed
deliveries. Conversely, quality and
innovation oriented reshoring
strategies were signaled by reshoring
motivations such as IPR protection,
search for high quality, value attached
by customers to a “Made in” product
and product innovation. Finally, we
posited that flexibility-oriented
strategies would be signaled by the
quest for customer proximity and
production flexibility. We labeled
“pure strategies” those for which
reshoring motivations belonged to a
single reshoring strategy (either cost
or flexibility or quality) (342
initiatives), while “hybrid strategies”
are those were a combination of
motivations consistent with different
strategies was mentioned in the
source (292 initiatives). For the vast
majority of cases, motivations were
inferred from the direct quotation
“between brackets” of the person
interviewed.
Table 2 shows that cost- and quality-
oriented strategies are the ones most
frequently tied to reshoring initiatives,
while flexibility-strategies motivate
reshoring less often. Among
reshoring firms adopting Industry 4.0
technologies, those including cost
control motives are slightly higher
than those including quality-motives.
These latter are very often also firms
involved in new product development.
Hence, our sample partly confirms

Figure 1 describes the distribution of

reshoring initiatives and of reshoring
initiatives with Industry 4.0. The figure
shows that while reshoring spans a
wide range of industries, both
labor- (e.g., textile) and capital-
intensive (e.g., automotive),
investment in manufacturing
technologies is sensibly lower for
labor-intensive sectors.

RQ 2 – Does the adoption of Figure 1. Reshoring and Industry 4.0 by manufacturing industry.
Industry 4.0 by reshoring
manufacturers depend on their
business strategy? Table 2. Strategies Underlying Reshoring and Industry 4.0
Motivations % % adopting Industry 4.0
In order to answer this question, we Cost Total costs of sourcing 26 15
searched the sources for indications Labour costs
Logistics and labor costs
of the motives underlying reshoring Offshore control complexity
and classified them according to Delays in delivery
whether they matched quality- Quality IPR protection 19 18
oriented, flexibility-oriented or cost- Product innovation
High quality
oriented reshoring strategies. Made in
Specifically, as shown by Table 2, we Flexibility Production flexibility 8 2
classified as cost-oriented strategies Customer proximity
those motivated by the perceived CostþQuality 21 35
increase in labor, logistics costs, and CostþFlexibility 9 13
QualityþFlexibility 6 4
total costs of sourcing from offshore QualityþCostþFlex 11 13
locations, those motivated by a
RESHORING AND INDUSTRY 4.0: HOW OFTEN DO THEY GO TOGETHER? 93

the arguments developed in
Section 2, since investment in new
technologies by reshoring firms is
motivated by the need to substitute
the labour component, which still
exhibit unit costs three to sixfold costs
in China, and to create a closer
coupling of production and
development when new product
innovation is involved.
Among reshoring initiatives that
cannot be reconciled with any of the
previous strategies, contextual
factors, such as the global economis
crisis (48 cases) and the global
reorganizations of the firms’
operations network (93 cases) play a
major role. Interestingly, reshoring is
associated with new production
technologies only in one of these
cases, signalling that production is
being relocated at home due to
untapped production capacity
determined by the reduction of
market size.
between strategic and error
correction reshoring. Rather, the short
duration of offshore investments
signals the realization by the firm that
offshoring is incompatible with the
firm’s business strategy. Of interest is
also the fact that short durations of
offshore operations are never
associated with the adoption of new
technologies when the company
returns home. This suggests that
robotics and other technologies are
called to compensate for the
destruction of skills and supply base
at home.
RQ3 – Do reshoring firms
automate in insourcing mode?
The analysis of the governance mode
following reshoring shows that firms
that adopt automation tend more
frequently to automate in house,
rather than seek external suppliers
with automated facilities. Figure 3
illustrates that the percentage of
companies switching from external
suppliers to in house production
(OUT IN) following reshoring is 23%.
However, this figure climbs to 37% for
reshoring firms adopting automation.
On the one hand, in house production
is chosen to take into account that
massive offshoring in the past have
nullified some labor competences.
On the other hand, it may be easier
to acquire in-house competencies in
advanced technologies, rather than
relying on suppliers’ technology.
One reason is that, especially small
and medium suppliers may have
limited digital capabilities.
Therefore, when evaluating reshoring
initiatives, firms must weigh the costs
of relying on home suppliers and/or
training home labor force to re-create
 vis capital investment
lost skills vis a

In order to throw some light on

whether reshoring represents the
correction of mistaken offshoring
decisions, we plot the frequency
distribution of the duration of
offshoring, calculated as the
difference between the year of
reshoring and the year of offshoring.
The analysis is based on about half of
the reshoring initiatives in the
database (437), for which information
on duration was available. The
contention is that “failure” reshoring
will be signaled by a short stay (< ¼ 5 Figure 2. Length of stay offshore.
years). Conversely, the longer the
stay, the more likely that reshoring
responds to changes in competition,
in supply markets, or in institutional
conditions. Figure 2 shows that a
length of stay of five years or less
affects about 30% of cases.

In 95% of these cases, the short

length of stay offshore is associated
with clear motivations that can be
reconciled with one of the strategies
discussed above. This finding
suggests that there is no real conflict Figure 3. Governance mode chosen by reshoring firms.
94 IEEE ENGINEERING MANAGEMENT REVIEW, VOL. 46, NO. 2, SECOND QUARTER, JUNE 2018

in technology and the recruitment of
knowledge workers for handling that
technology.
5. IMPLICATIONS
Based on the results of this article
several implications for managers
and manufacturers can be
suggested.
1. Robotics is not a necessary
ingredient of reshoring. The
majority of reshoring
manufacturers has not adopted
robotics and labor saving
technologies. Especially
reshoring companies with
quality-oriented strategies rely on
the premium price that the higher
quality of products made in high
cost countries can guarantee.
2. Cost-oriented companies adopt
robotics. Because the labor cost
gap with respect to offshore
production weights relatively
more on these companies, they
need to plan to adapt their
technology when repatriating
production.
3. Industry 4.0 supports
manufacturing reshoring when
design and product innovation
are involved. 3DP is allowing
swift modifications of design and
fast prototyping, at costs slightly
higher than those borne in China.
4. Technology is called to fill the
void created by labor
competences destroyed by the
offshoring process.
Manufacturers planning to
reshore may need to resort to
robotics when the old supply
base has vanished, and because
of a shortage of skilled workers.
6. CONCLUSION
New technologies can play a role in
reshoring initiatives by enhancing
competitiveness from the cost
perspective, therefore laying the
ground for the long term viability of
manufacturing relocations to high
cost countries. In this exploratory
research, we show that new
technologies characterize a limited
proportion of reshoring, suggesting
that these technologies has not been
so far a key enablers of repatriations.
Future research on the performance
of reshoring firms will show whether
there will be a significant performance
differential between firms engaging in
labor saving technologies or
digitalization and others that do not.
As Industry 4.0 technologies mature,
future research should also ascertain
the impact of these technologies on
global sourcing and global production
networks. Actually, different Industry
4.0 technologies may have different
impacts on the location of
manufacturing activities. For
instance, big data analytics and
digitalization improve the capability to
coordinate activities remotely, and
may therefore make location in low
cost countries attractive again.
Further, the growing diffusion of
robots in manufacturing and their
digitalization interfaces may not per
se change the advantages of
offshoring, unless a technological
superiority of western countries
innovation systems can be assumed
in the medium term. For example,
China, one of the preferred offshore
locations for western companies, has
adopted policies to contrast the
potential outflow of manufacturing.
Further, the China 2025 plan is
exerting pressure on Chinese
manufacturers to increase capital
investments with particular emphasis
on automation and digitalization,
although China still lags behind other
countries in terms of robot density.
The medium term projection of this
state of facts is that the locational
advantages of Industry 4.0 for high
cost countries may be short-lived. In
fact, components produced through
automated processes may continue
to be produced in Asia and shipped to
western markets.
Conversely, Industry 4.0 may
sustainably drive reshoring in all
those instances in which the
geographical reintegration of the
value chain is important for product
development, prototyping, etc. In
these cases, the co-location of
production and development may
become a source of value creation,
while new manufacturing
technologies may contribute to curb
production costs. Technologies such
as additive manufacturing, which
allow for extensive product
customization, become an effective
enabler of sustainable reshoring
moves.

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Alessandro Ancarani received the Ph.D. He is an Associate Professor in management

 di Catania, Catania, Italy. He has authored or coauthored in leading
engineering with Universita
journals such as British Journal of Management, International Journal of Production Economics,
and International Journal of Production & Operations Management. His research interests
include the analysis of intangibles in public service organizations, public procurement, suppliers’
performance evaluation, behavioral operations, and manufacturing location decisions. He was
the Co-Editor-in-Chief for the Journal of Purchasing and Supply Management (2010–2015). He
is the Editor-in-Chief for the Journal of Public Procurement. He was the President of IPSERA
during 2009 and 2012 and the Founding Member of EDSI.

Carmela Di Mauro received the D.Phil. degree in economics. She is an Associate Professor
in management engineering with the University of Catania. She has authored or coauthored
more than 25 articles in Scopus-indexed journals, and is currently involved in research projects
on the reshoring of manufacturing and the role of human behavior in operations management.
Her research has won awards both at home and internationally. She is an Associate Editor for
the Journal of Purchasing and Supply Management, and a member of the Board of Directors of
the Decision Sciences Institute (2018–2020).