The key issue facing business leaders in Europe and European politicians is how to make globalization a success. At the World Economic Forum Annual Meeting in Davos-Klosters (Switzerland), David Cameron, UK Prime Minister, spoke. He said that reshoring is the new trend in order to accomplish this. Offshoring is the reverse of re-shoring. Outsourcing jobs, which is often done abroad to get lower labor costs or lower taxes, refers to the practice of offshoring. Re-shoring is the process of bringing work back to your country. Offshoring has brought down productivity and quality, which is why companies are becoming more concerned with the operational problems that result. Reshoring has been encouraged by increases in wages in those countries, improved domestic energy production, such as in the US and government incentives. Cameron stated that Shale gas could facilitate reshoring. Europe must act quickly to take advantage of the opportunities for reshoring. Cameron thinks that the main factor driving reshoring to the UK will come from the discovery of shale gas. This will greatly reduce domestic energy prices. For years, rumors have grown that the West is losing it. Cameron stated, “It’s the same dystopian vision. Cameron stated that the West wins and the East loses, while workers win while machines win. He cautioned that the West can’t afford to get “starry-eyed” about globalization. The trend is to move jobs from East to West, which was the case before. Cameron stated, “It is time to bring back the benefits of globalization to hardworking individuals in security stability and peace-of-mind.” A survey of UK small- and medium-sized companies found that over 10% have returned some production to the UK in the past twelve months. According to Cameron’s survey, more than 30% US-based manufacturing firms are planning to move production plants back to the United States. Development of shale gas plays a major role in US reshoring. Cameron stated that “This is flooring US energy prices with billions in energy cost savings expected over the next decade.” The same thing could happen in the UK or the rest of Europe. Cameron stated that “Right now, economies in Europe have an unprecedented opportunity to accelerate the new trend of jobs returning home.” Cameron explained that Europe must resolve two important arguments before it can benefit from reshoring. First, Europe needs to establish a stable macroeconomic environment. Free trade is essential in order to ensure that countries have strong financial institutions, manage their debts and deficits, and openly allow free trade. Cameron stated that Europe must have a “unashamedly probusiness regulatory environment.” Some people still believe that ever more social protections and regulation is the secret to success. They want reliable and cheap energy options, including nuclear, shale and renewables. Cameron stated that “We must explore the opportunities offered by shalegas.” Cameron acknowledged the need for public assurances about the potential environmental hazards of shalegas, and the need for appropriate regulations. Investors will quickly move to countries outside the EU that impose burdensome, unjustified or premature regulations regarding shale gas exploration in Europe. Cameron stated that “Oil, gas, and other resources will continue to be abundantly available, but Europe will become dry.” Cameron was asked about Britain’s relationship to the EU and said that there is an “enormous dissatisfaction and public concern” regarding the European Union. Let’s both reform the EU, and the UK’s relationship to the EU. He said that it was possible, achievable and winnable to allow Britain to remain in a reformated EU. Learn more about reshoring.
