The world of today uses Steel in multiple scenarios. Several industries use it as part of their prime materials, or for infrastructure construction. Steel is a sector of the economy that contributes to the growth and stability of regions. There’s where Nearshoring comes into play.
Nearshoring is an entrepreneurial strategy that implies establishing production and services operations in countries with geographical proximity, instead of distant countries. It is a form of externalization and outsourcing. Instead of moving operations to countries with lower labor costs in distant regions, it looks to establish in closer countries.
Big worldwide corporations that used to save money by making their production be done in countries with cheaper labor, now wish and seek to install factories in strategic places with stable economies and without conflicts that might put in risk production.
In the case of the steel industry, nearshoring is the practice of establishing production and service operations related to steel in close countries or close to the mother business or market destiny. This implies moving production or services to close countries with the goal of taking advantage such as a reduction in costs of transportation and logistics.
Among the advantages of nearshoring and the steel industry is in minimizing costs in transportation and logistics as steel products would not have to be transported long distances, which means savings in freights costs and better efficiency in the supply chain, making it shorter and more agile.
Another benefit is that the geographical and cultural proximity makes communication and coordination easier between the mother business and operations, improving efficiency and decision-making.
An added benefit for nearshoring and the steel industry is that it might lower risks, such as political ones, changes in commercial regulations, and fluctuations in foreign exchange. When you have production operations or related services in close countries, the business might also diversify its supply chain and reduce its exposition to global risks.
More businesses bet in favor of the commercial strategy of nearshoring to have more efficient costs without putting production at risk, and steel production is no exception.