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 Tip

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 Tip

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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