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Technology and knowhow attract manufacturing back to the Nordic countries

A great deal of industrial production has been offshored from Finland and other Nordic countries, but some production is also returning. How could this trend be encouraged? According to researchers both political actions and investments in Nordic innovation systems are needed.
Photo: Valmet Automotive
Photo: Valmet Automotive

The return of previously offshored industrial manufacturing to the Nordic countries is a phenomenon that interests researchers, policy-makers and companies alike. Further information on the drivers and consequences of backshoring is needed to support companies considering the feasibility and profitability of bringing their production back. The recent final report of the Reshoring of Manufacturing project by researchers from Tampere University of Technology (TUT) sought a better understanding of the extent and nature of relocation trends in manufacturing in Finland, Sweden and Denmark.

The results among the Nordic manufacturing firms show that offshoring is still clearly more common than backshoring. The main reasons for offshoring include labour and other costs.  Production relocated to the Nordic countries is typically more complex and also more information and technology-intensive. Of the three countries studied Sweden had done the highest share of backshoring.

– Companies come back, because they need expertise, knowledge, technology and close cooperation between production, R&D and product development. Recent significant production investments in Finland include the Valmet Automotive car factory in Uusikaupunki, the Metsä Group bioproduct mill in Äänekoski and the Meyer Werft shipyard in Turku, together with their Finnish supply networks. Smaller companies also provide encouraging examples of strengthening their production in Finland, says Professor Jussi Heikkilä of the Laboratory of Industrial and Information Management at Tampere University of Technology.

The research shows that the status of the Nordic countries as a strong area for high value-adding manufacturing companies can be enhanced through policy decisions, high-quality research and long-term development.

– Competitiveness in the Nordic countries needs to be ensured. This entails investing in product, process and supply chain innovation. Also, colocation of R&D and production need to be promoted, Heikkilä explains the project findings.

– Many companies also lack a clear strategy guiding their production location decisions. Major decisions may be taken based on surprisingly scanty information. There is a clear need for continuous research in this field.

The final report highlights issues such as the type of information used in decision-making regarding manufacturing relocation, utilisation of manufacturing innovations and global investments made by large manufacturing companies during the period 2005-2015. The 2.5 year research project utilized data from a number of different databases, a large-scale survey for the Nordic manufacturing companies and exploratory case research.

The Reshoring of Manufacturing (ROaMING) research project was conducted during the period 2015-2017 as a joint effort by Tampere University of Technology in Finland, Lund University in Sweden and the University of Southern Denmark. The research in Finland and Sweden was funded by Tekes and VINNOVA through their joint innovation research programme entitled Renewal of Manufacturing.

The research report Relocation of Nordic Manufacturing is available online at http://urn.fi/URN:ISBN:978-952-15-3939-8

Additional information: Professor Jussi Heikkilä, Tampere University of Technology, +358 50 376 1090, jussi.heikkila@tut.fi 

News submitted by: Sanna Kähkönen
Keywords: science and research, industrial and information management