Near and Far, Distributors Are Moving Local

// April 28, 2016
Reading Time: 2 minutes


“Nearshoring” is a growing trend where manufacturers move their main manufacturing plants back to North America. This is an important phenomenon in the industry because it affects all members of the supply chain: suppliers, distributors and retailers, as well as their respective supply chain management techniques.

Moving manufacturers back to North America creates centralization for the members of supply chains, and, the closer the pieces of the supply chain are geographically, the less potential exists for a loss. Nearshoring is gaining popularity due to increased foreign labor and transportation costs. As such, 32 percent of American manufacturing companies surveyed have moved their main manufacturing plants back to North America in the past year. Forty-eight percent are planning on making the move within the next three years.

What increased nearshoring means for the insurance industry is that there are more domestic manufacturing plants, which means more opportunities to write coverage for their distributors. According to Harvard Business Review, this is a growing trend that reflects a transformation in the global market; we are shifting from a global market to a regional market. Research from MIT Sloan Management Report suggests that managers with segmented and regionalized supply chains can create and implement solutions fairly quickly in the event of a disruption. Therefore, this is a shift that will continue to help reduce the potential loss for distributors and one that will continue to trend up.

Distribution companies act as the link connecting the suppliers to the retailers, but in addition to distributing the finished products, they also act as marketers for their producers, working to resell their finished products. While having more centralized supply chains lowers the risk for loss, certain exposures are inherent to the distribution industry. Examples of losses include injury to shoppers while setting up displays at retail stores, injury to customers visiting distribution centers or product spoilage and/or fire losses at distribution centers.

Our Distributor and Wholesaler product provides broad liability and property coverages designed for these common exposures. We can consider coverage for over 50 classes of products in a range of industries. With the influx in need for distributors in America, think of Devon Park Specialty for providing coverage for their common, but unique exposures.

Please contact your Devon Park Specialty underwriter for more information or a quote.

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As always, thank you for your support and business.

Karen FordContact Cheryl Ryan
Executive Vice President, Devon Park Specialty Insurance | Division Leader – Commercial Lines | 888-523-5545, Ext. 2582

Jeff EstabrookWritten by Molly McShea
March 3, 2016