Ikea is exploring ways to enhance its manufacturing outreach in the US and across the Americas, in response to increasing logistical issues and a deep-rooted trend away from universal fluid trade. The move is being contemplated by Inter Ikea, the entity in charge of directing the global strategy of the Swedish retail giant, as it also grapples with the consequences of assaults on vessels by the Houthi rebel faction in the Red Sea.
In an interview, Susanne Waidzunas, the international supply manager at Inter Ikea, highlighted that North America is a market where Ikea has a lesser regional production presence. She outlined ongoing plans to evaluate how their presence could be amplified in this region, foreseeing opportunities for expansion in both South and Central America and the US.
Inter Ikea disclosed that approximately one out of every ten products sold by Ikea in the Americas is manufactured locally, with 51 home furnishing providers situated within the region. As a series of recent disturbances compel companies to reassess the dynamics of globalisation and their longstanding reliance on Asian factories, Inter Ikea is amongst the multinational corporations contemplating positioning its production closer to the US, a prime consumer market.
Waidzunas noted that many enterprises have lately proposed establishing new facilities within the US or across Mexico, as rising discrepancies between the US and China are projected to complicate and escalate the cost of formerly uncomplicated trade between the nations.
She pointed out the high dependence of the American market on oceanic routes amidst strains on global shipping capacities due to Houthi offensives in the Red Sea in solidarity with Gaza’s Palestinians amidst the Israel-Hamas conflict. The consensus is that these Houthi assaults will persistently impair shipping networks, risking a further global supply chain meltdown for businesses that have already endured the effects of the Covid-19 pandemic and Russia’s conflict with Ukraine.
Waidzunas proclaimed this to be a “permanent shift” towards a more temperamental and dynamic global landscape. In contrast to the Americas, a majority of Ikea products sold in Europe and China are produced locally, however, efforts are being implemented to further minimise any unhealthy dependencies on specific countries or trade channels. Shortly following the initial attacks by the Houthis on ships in November, Ikea issued a warning that such disruption could cause potential lags and limitations in the availability of certain Ikea products.
Waidzunas stated that the retail company is now experiencing significant strain across its supply chain. She noted that they had swiftly adjusted safety stock levels, however, they couldn’t avoid the effects completely.
Additionally, she mentioned that a considerable number of their competitors were placing orders early for Autumn, Christmas sales, and Black Friday. This validates recent cautions about a rising quantity of retailers and manufacturers stockpiling for the bustling shopping period, months in advance.
Earlier within the month, the CEO of the Danish container shipping conglomerate, AP Møller-Maersk, asserted that clients have already started shipping merchandise for later in the year. Vincent Clerc expressed concern that the hastened ordering could obstruct the supply chain. – © The Financial Times Limited 2024.