Strongest reshoring-related growth in 2023 in Vietnam: S&P GMI report

Thirty-seven per cent of Vietnamese manufacturers signalled that they had seen an improvement in demand over the past 12 months as a result of reshoring, by far the highest of the four countries for which data were collected, where the equivalent figure was around the 20 per cent mark in each case.

For Mexico, where this survey was conducted for the second year running, the proportion of companies reporting growth as a result of reshoring was broadly in line with that seen in 2023 (18 per cent in 2024 versus 19 per cent in 2023).

In all cases, large firms were most likely to have seen demand improve as a result of reshoring and were most optimistic.

When asked to identify challenges and risks likely to prevent firms from fully capitalising on growth opportunities, manufacturers generally cited cost and availability of capital as a key obstacle.

There were other more specific national issues at play. In Mexico, security was cited as a key hurdle, while in Turkiye and Malaysia shortages of skilled labour featured prominently. Vietnamese firms were worried about being able to access the required technology.

While progress over the past year in Mexico has been less than expected, manufacturers were increasingly optimistic of seeing growth opportunities over the coming year as a result of reshoring. Forty-seven per cent of firms in Mexico were optimistic, broadly in line with the figure in Vietnam (46 per cent).

Meanwhile, proportions of firms expecting growth linked to reshoring were lower in Malaysia (30 per cent) and Turkiye (24 per cent), the report said.

Common across all countries, large manufacturers were more likely to report growth linked to reshoring than small and medium companies. Large firms in Vietnam led the way (40 per cent), just ahead of Turkiye (35 per cent).

At the other end of the scale, small manufacturers in Mexico were the least likely to report demand improvements due to reshoring, with just 9 per cent of firms responding yes to this question.

Meanwhile, large firms in Mexico were strongly optimistic of gaining from reshoring over the coming year, with close to two-thirds of companies optimistic.

This put them just ahead of Vietnam, where 54 per cent of large manufacturers predicted growth over the next 12 months. Again, large firms were more optimistic than SMEs, with the gap particularly stark in Mexico.

ALCHEMPro News Desk (DS)