Offshoring in the Spanish footwear industry: A return journey?

•After the offshoring wave during the last decades, some firms are undoing this process.•This manuscript analyzes this phenomenon in a labour-intensive industry: footwear.•The reduction in the cost differential and the need of smaller and more frequent batches explain it.•These conclusions are in accordance with the theoretical framework for the location of production.•Given these results, developed economies may host labour intensive activities again.

During the 1990s and the first decade of the twenty-first century, outsourcing and offshoring constituted one of the most significant changes made by companies throughout the world. However, in more recent years, the process of offshoring manufacturing activities has been subject to reconsideration by some industry leaders, which has led to cases of bringing back operations to the country of origin. This process has been called insourcing, inshoring, reshoring or backshoring. This manuscript analyses this phenomenon in the footwear industry cluster in the province of Alicante where the main part of the Spanish footwear sector is concentrated. The study is based on interviews with the directors of the industry׳s leading companies. The results reveal that this phenomenon is a response to changes in both the economic climate (wage differentials have fallen) and changes in the market which is demanding smaller batches in shorter time frames. Companies are only able to satisfy this new demand if they manufacture in Spain.