Building Resilience (DP IB Geography): Revision Note
Reshoring by TNCs
Companies are re-evaluating their manufacturing processes by bringing production closer to home
Reshoring is where manufacturing and industrial operations are brought back to the company's home country
Reshoring helps improve local economies and revive domestic industry by reducing reliance on overseas goods
For instance, the Suez Canal is one of the world's most important shipping lanes
In March 2021, a container ship blocked the canal for 6 days at an estimated cost of $9.6 billion in goods per day or 12% of global trade
The chemical, pharmaceutical, aerospace, textile and hi-tech industries particularly benefit from reshoring because it improves quality control, reaction times to market demands, and transport costs
Reshoring marks a shift in globalisation
Reasons for reshoring
HICs offshored much of its manufacturing to LICs as they offered lower labour costs and relaxed regulations
However, there are rising concerns in HICs over:
Source of raw materials
Working conditions and child labour
Quality control
Delivery times
Current levels of unemployment
Intellectual property rights
Overseas push factors include:
Rising global oil prices and transport costs
Lack of skilled labour in LICs
Rising labour costs in LICs and NICs
Supply chain risks such as sanctions, geopolitical unrest and pandemic recovery
Pull factors for HICs include:
Higher levels of R&D and regulations in HICs
Rising demand for custom products and niche markets
Public demand for home-made products
Demands for quicker delivery by customers
Impacts of reshoring for HICs
Impacts of reshoring include:
Direct impacts
High start-up costs
GDP increases
Employment rises
Regionalisation
Indirect impacts
Potential talent gaps can make it difficult to recruit suitable employees, thereby delaying start-up
Disruptions in current supply chains will delay production
Global competition and trade can make the goods produced too expensive
Multiplier effect
Employees spend their earnings in the economy
Increase in demand for services
Case Study
Retail giant Walmart launched its "Made in the USA" project in 2014 to support American manufacturing jobs
Walmart committed $250 billion over 10 years by buying products grown or made in the U.S
In 2021, Walmart extended that commitment to 2030, with another $350 billion to be spent on goods made, assembled or grown in the U.S
Walmart has supported roughly 300,000 direct manufacturing jobs in the US and up to 1 million total jobs
Reshoring suppliers to Walmart has included:
Malibu rum in Fort Smith, Arkansas, from Canada
Ozark Trails bikes in South Carolina from China
Because of increasing costs and supply chain disruptions, the Ford Motor Company reshored some of their manufacturing back to the US
The company opened new domestic factories and hired workers, enhancing control and reducing vulnerabilities
In January 2021, bus manufacturer Alexander Dennis (ADL) announced it was bringing manufacturing back to the UK
The chassis for its electric buses were assembled in the UK, but manufactured in Hungary and China
By having the whole process in the UK, ADL hopes to deliver its buses faster and reinforce the "Made in the UK" branding, despite production costs being lower overseas
Examiner Tips and Tricks
Always be synoptic when answering extended questions. For example:
Due to the rise in anti-globalisation and nationalism, political changes by governments have led to companies reshoring their manufacturing and impacting the physical environment.
Crowd-Sourcing Technologies
Crowdsourcing is a way of getting work, information or opinions from a large group of people via the internet with or without paying them
It is a high technology, bottom up approach of empowering communities around the world
It provides a chance for people to interact with each other and to find solutions to new and old problems
Types of Crowdsourcing
Name | Explanation | Example |
|---|---|---|
Wisdom | A large group of people are collectively smarter than individual experts | Problem solving, decision making etc. |
Creation | Using a crowd to collaborate on a design or to build something | Open-source software, wikis |
Voting | Using the democratic principle of the majority wins | Policy change, course of action, outcome of a competition etc. |
Funding | Raising money for various projects If the goal is not met, all donations are refunded | Disaster relief, artistic support, start-ups, market research etc. |
Methods of Crowdsourcing
Name | Explanation | Example |
|---|---|---|
Microtasks or microjobbing | Breaking a large project into smaller, defined tasks for a crowd of workers to complete | Data validation, research, image tagging and translation |
Macrotasks | Presenting a project to the crowd and asking them to get involved with the parts they have expertise in. | Product innovation and R&D |
Contests | Asking a crowd for work and only paying the winning entries | Logo design, business names, branding |
Crowdtesting | Asking a target crowd to test and feedback on software products | Software, apps, online games, websites etc. |
Advantages of crowdsourcing
Crowdsourcing brings together communities around a common project or cause
It is an efficient way of solving time-intensive problems
It is empowering and develops community engagement, and builds loyalty to the product or solution
Crowdsourcing can show how different people perform or interact at the same job
Disadvantages of crowdsourcing
Results can be biased depending on the crowd being sourced
There is a lack of confidentiality or ownership of an idea
There is the potential to miss the best ideas or talent
The project can lose direction and fall short of its goal or purpose
Wikipedia is a non-paying crowdsourcing platform where anyone can contribute, edit or improve the content
Examples of crowdsourcing
Amazon's Mechanical Turk (MTurk or AMT) is a crowdsourcing marketplace that businesses or researchers can use to outsource parts of their jobs, everything from data validation to finding survey respondents to content moderation
Anyone can sign up through their Amazon account to be a Mechanical Turk Worker
Netflix conducted a large-scale crowdsourcing experiment in June 2023 to see how changes in screen size affected perceptions of video quality
Yale University School of Medicine Associate Professor Lisa Sanders, MD, crowdsourced diagnoses for mysterious and rare medical conditions in a Netflix serious based on her bimonthly column in The New York Times Magazine
Examiner Tips and Tricks
Do not confuse crowdfunding with crowdsourcing.
Crowdfunding is about raising money for a project.
Crowdsourcing is about getting information, raising awareness, sharing knowledge, problem solving, marketing etc.
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