As businesses diversify their supplier base beyond traditional manufacturing powerhouses, Thailand, the Philippines, and some Latin American countries are emerging as the next generation of global supply chain hubs.
A risk intelligence firm, Verisk Maplecroft, said a small number of countries might become the next leading manufacturing hubs in a July 16 review of rising stars for global supply chains. That refers to Thailand, which is the biggest automaker in Southeast Asia and one that is seeing a surge in electronics as investment in artificial intelligence continues to rise.
In addition to this, in South America, Argentina has established itself as a top contender, owing to trade agreements with the U.S. as well as the EU that have made it a desirable supplier of critical minerals and energy as well as industrial exports. Chile is also a lower-risk Pacific-side play because of advancements in the labor rights of the country and the comparatively open nature of its trade markets.
This enables manufacturers to spread production throughout a wider range of countries and decrease their exposure to geopolitical as well as trade risks, said Verisk.
The companies that move first, like screening such markets now, developing supplier ties ahead of the demand spikes, and stress testing entry plans against the external risk data, are going to be much better placed in order to act in the face of disruptive geopolitical realignments, restrictions in trade, or outbreaks of conflict, said the firm.
It is well to be noted that the search for leading manufacturing hubs has been accelerating lately as businesses have attempted to establish stronger supply chains amid an endless number of disruptions. The report by Verisk said such decisions are increasingly influenced by elements like market transparency, regulatory frameworks, and having access to strategic industries and not just labor costs. This is also happening because circumstances across all three factors are getting worse in traditional hubs such as Vietnam and Malaysia.