Prevalence and Characteristics of International Sourcing in Finland and Sweden

As a part of our ROaMING project, we have surveyed medium-sized and large manufacturing companies in Finland and in Sweden on their cross-border relocation decisions. We find that both offshoring and backshoring are more prominent in Sweden than in Finland but that the flows into and out of the country are more balanced in Sweden than in Finland; in the Finnish case, the share of companies engaged in offshoring is twice as large as the share of backshorers. As for the motivations for relocations, there is a clear difference between drivers for offshoring and backshoring. Predictably, labor cost is the most significant driver for offshoring. The drivers for backshoring reflect Nordic strengths in innovation and brawnness in production – eminent factors for backshoring to Finland and Sweden are: quality, flexibility, lead-time, access to skills and knowledge, access to technology, and proximity to R&D. Even if Finland’s and Sweden’s strengths clearly related to their citizens’ and organizations’ skills and competences, policymakers also need to keep a keen eye on cost competitiveness. The future of manufacturing in Finland and Sweden clearly depends on the vitality of the countries’ innovation systems.