Crisis and climate force supply chain shift (Richard Milne)

Aug. 9, 2009 -- AMSTERDAM (Financial Times) -- Manufacturers are abandoning global supply chains for regional ones in a big shift brought about by the financial crisis and climate change concerns, according to executives and analysts.

Companies are increasingly looking closer to home for their components, meaning that for their U.S. or European operations they are more likely to use Mexico and eastern Europe than China, as previously.

“A future where energy is more expensive and less plentifully available will lead to more regional supply chains,” Gerard Kleisterlee, chief executive of Philips, one of Europe’s biggest companies, told the Financial Times.

Supply chain experts agreed, with Ernst & Young underlining how as much as 70 per cent of a manufacturing company’s carbon footprint can come from transport and other costs in its supply chain.

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