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Going regional to save carbon will surely cost

It could be because of silly season, as August is often called in the global media.

The Financial Times has today published an article, entitled: “Crisis and climate force supply chain shift”.

It argues, from limited sources, that transport and carbon costs/concerns are forcing companies to think harder about regional sourcing once again.

So, for Europeans, Ukraine rather than China, or for the U.S., Mexico over say, India.

One major hole in the article is the issue of labour costs.

Carbon costs are set to rise, we know that.

And so will transportation expenses, given the limits of fossil fuels beyond 2020 or so.

These, and political pressure for more supplier development closer to home, will play a role for sure.

But surely labour costs are going to be the biggest factor.

Wages are the biggest expense to any business. These concerns are what has driven globalisation.

Why would that change now, despite climate and fuel concernsm, unless China catches up with Ukraine on pay levels within a decade?

1 Comment

  1. Good thinking. But time wil tell: maybe in 2020 China no longer will be the sweatshop of the world and Europe will be forced to offer cheap labour for themselves.

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