From offshoring to reshoring: How social enterprises like WAAK make a difference

Until a decade ago many companies relocated their production to low-wage, ‘offshore’ countries to reduce costs. Today, however, an opposite trend, called ‘reshoring’ is on the rise. This shift is driven by rising wages in low-cost countries, higher transport costs, stricter sustainability standards, the need for stronger quality control and shorter lead times. Reshoring, however, also comes with its own set of challenges. With our extensive expertise in industrial production and quality control, we can support companies throughout this transition.

From offshoring to reshoring

Until about ten years ago, many Belgian companies decided to move their production to low-wage countries such as the Czech Republic, Romania, Poland, or China due to high local labour costs. Numerous industrial companies and suppliers producing semi-finished products or components closed their local operations and relocated. In recent years, however, wages in countries like Poland and the Czech Republic have risen, leading to the opposite trend: more and more companies are bringing their production back.

Offshoring or reshoring manufacturing? A strategic choice

Choosing between moving abroad and local production is a strategic decision. Although wages abroad are on the rise, labour costs in Belgium are still significantly higher than in low-wage countries, which obviously impacts profit margins. From this perspective, offshoring may still seem the most logical choice.

It is, however, essential to consider the actual total cost. It is important to take all factors into account: the longer the supply chain, the higher the costs, and that includes transportation and import duties as well. Concerning the latter, you are often affected by unstable political regimes. The current tariff situation in the USA illustrates this well. Companies producing locally are not confronted with these risks.

Finally, quality should also be an important consideration. Offshore production is not always as advantageous as it appears. The quality of components or products manufactured abroad can sometimes fall short, as quality controls are often less stringent. Defects may only be detected later, once the products are back, which can result in higher costs. Even worse, if these issues go undetected, they can damage the company’s reputation.

Facilitating reshoring through social enterprises like WAAK

From this perspective, and with the total costs in mind, it isn’t illogical that companies consider bringing their production activities back. Not every company, however, has sufficient production facilities or capabilities, which can make reshoring appear as an insurmountable task.

This, however, does not necessarily have to be the case. As a social enterprise, WAAK can facilitate the process. In addition to providing capacity, space, and storage solutions, we have many years of experience in setting up production lines and implementing quality control systems. Companies partnering with WAAK can rely on a dedicated co-engineering team to translate their requirements into an efficiently designed production system.

As a social enterprise, we also specialise in developing quality control solutions, such as camera control systems. The software behind the system automatically detect errors. By applying these to your production, we can ensure a defect-free product.

WAAK is a company with an integrated range of services, offering many advantages for its customers. As such, companies can come to us not only for cable assembly, but also for metal or plastic assembly. For example, a customer like Smappee, the largest EV charging station manufacturer in Belgium, not only utilises WAAK Metal Assembly’s extensive machinery but also uses our cable harnesses. Our broad range of services allows companies to have multiple or all components of their product manufactured at WAAK, thus fully outsourcing the work of an entire production unit.

AQUALEX and WAAK: A succesful reshoring project

A wonderful reshoring case is our collaboration with AQUALEX, a Belgian company that produces innovative, high-end drinking water systems. A few years ago, they decided to bring their production back to Belgium, aiming to respond quickly to potential quality issues. Given their rapid growth, this had become essential.

Although AQUALEX had its own production facility, it did not have the right employees to get the job done. They therefore deployed an Inhouse Enclave team to the production floor. The WAAK team handles the simple serial work, with a supervisor performing the quality checks, while AQUALEX’s staff carry out the final assembly and quality control.

Quality control, however, is not the only reason AQUALEX chose to partner with WAAK. For the company, sustainability is very important. The daily transport of components and finished products to and from abroad does not align with this vision, whereas local production does. Creating a sustainable supply chain has become increasingly important for companies like AQUALEX. In this regard, collaborating with a social enterprise adds significant value.