Labour and automation in reshoring

Abstract: Background: Companies operating in the low-cost offshore locations are increasingly challenged with various critical issues more recently that have directed their attention towards re-evaluating offshore strategies and considering reshoring. Rising labour costs, labour shortage and high labour fluctuation in offshore locations continues to create substantial risks and disturbances to the business and supply chain. These difficulties, especially in the light of higher labour productivity levels of developed countries and prospects of automation and robotisation, has persuaded many to believe this trend would encourage reshoring and enable companies to see manufacturing in developed countries cost effective once again. However, studies in reshoring are scarce, very little is known about labour or automation and especially how the two interrelates. Purpose: This thesis aims to explore the concepts of labour and automation and their interrelations in reshoring. Method: This research has adopted case study approach. Semi-structured interviews were carried out with a total of 6 companies from various countries, situated in both high and lowcost environments with reshoring intention or previous reshoring experiences. Transaction cost economics and the resource-based view have been applied in analysing the findings. Findings: This study has identified twelve labour factors and five automation factors in reshoring. The empirical findings showed labour cost as well as labour availability important in the decision of two companies. This study did not find empirical evidence to suggest automation as a significant reshoring motivating factor. Reviewing the literature also did not yield sufficient reliable evidence in support of automation. Labour and automation interrelations in reshoring have also been discussed as well as elucidating some considerations in applying automation in manufacturing.