The Hidden People Costs of Manufacturing De-risking Strategies
Across global manufacturing, the concept of de-risking has become a dominant theme. Shifting trade policies, geopolitical uncertainty and volatile logistics costs have exposed how fragile global supply chains can be. To reduce exposure, many manufacturers are bringing operations closer to their end customer markets, which is a shift that’s described as nearshoring or regionalisation.
On paper, the logic is sound. Nearshoring promises reduced shipping costs and improved supply chain resilience and control. Yet beneath the operational advantages lies a more complex truth that the success of these strategies depends on people. The hidden costs of de-risking are rarely found in logistics models or tax frameworks; they emerge from the workforce transitions that follow.
De-risking is a people transformation
When manufacturers decide to relocate production or establish regional hubs, the operational blueprint is usually the first to be designed. Plant locations, infrastructure, suppliers and logistics partners dominate the early discussions. People decisions often arrive later, once the strategic direction is already set.
By that point, HR leaders face a set of inherited risks. There can be gaps in local talent availability, delayed hiring cycles, inconsistent leadership structures and integration challenges between new and existing teams. These hidden people costs can delay production and undermine the very resilience that nearshoring aims to create. So much so that a study performed by Deloitte and The Manufacturing Institute found that 1.9 million manufacturing jobs could go unfilled in the US over the next 10 years if talent challenges are not addressed.
Workforce transformation must therefore be designed in parallel with operational change. Talent availability, leadership continuity and cultural cohesion are critical success factors and cannot end up as afterthoughts.
The talent challenge – where strategy meets reality
Nearshoring shifts the balance between global and local workforces. Teams that once operated across borders need to adapt to new environments, regulations and employment markets. In light of this, HR leaders need to answer a set of difficult questions early in the process:
- Is there enough skilled local talent to meet production needs? Some regions lack the technical expertise or scale required to support advanced manufacturing. Mapping these markets early using live workforce data allows companies to select locations with a sustainable talent base.
- What happens to the existing workforce? De-risking can lead to redeployment, redundancy or relocation. Each scenario carries financial and cultural costs. Poorly managed transitions can erode trust and trigger attrition across other business units. The World Economic Forum’s 2023 Future of Jobs Report warns that talent disruptions and role shifts are now among the leading causes of workforce instability in manufacturing.
- How quickly can new teams be operational? Hiring timelines often extend beyond project plans. Without building talent pipelines early or realistic resource forecasting, manufacturers risk falling behind their production schedules.
These challenges show that people strategy is the true foundation of any de-risking plan. Decisions made without workforce intelligence are effectively operational gambles.
Culture and cohesion as an unseen risk
Decentralisation can strengthen resilience, but it also disperses culture. New sites may operate under different leadership styles, employment laws and cultural norms. Without careful integration, inconsistencies appear in how teams communicate, collaborate and make decisions.
Relocated managers often bring established ways of working that may not translate well in the new context. Local hires may have different expectations around hierarchy, working hours or performance feedback. If these differences aren’t addressed early, the result can be disengagement and reduced productivity.
Embedding local leadership within senior teams helps bridge cultural divides. Establishing clear, consistent communication frameworks ensures that new sites share not just operational targets, but organisational identity and values. Culture needs to be designed with the same care as the supply chain.
The cost of ignoring workforce strategy
Many manufacturers underestimate how deeply workforce challenges can affect operational outcomes. These can lead to financial implications and threaten brand reputation as well as employee trust, which are both vital in competitive talent markets. Typical hidden costs include:
- Longer ramp-up times: Delayed recruitment and onboarding extend the time before a new site reaches productivity targets.
- Lost institutional knowledge: Relocation can prompt experienced staff to leave, eroding expertise and leadership continuity.
- Unplanned attrition: Employees may disengage or exit before new teams are ready to replace them if they are uncertain about their future.
- Cultural misalignment: Fragmented leadership structures create inefficiencies and hinder collaboration between headquarters and new sites.
Building resilience through people
Successful de-risking happens when organisations invest in workforce resilience alongside operational agility. Manufacturers that bring HR and talent leaders into planning and strategy conversations early are better positioned to manage transitions with precision.
The best approaches are ones that are multifaceted. For example, leveraging talent intelligence in location planning using live labour data can help identify markets with the right skills, pay levels and competitor activity. Alongside this, using structured leadership models and culturally aware change management approaches can help empower local leaders to make the right decisions and equip them to lead across diverse contexts.
These principles turn workforce planning from an administrative exercise into a strategic safeguard. They align the people dimension of de-risking with its commercial intent, which is reducing risk and strengthening resilience.
Eliminating the risk of de-risking
As global trade continues to fragment, nearshoring will remain a defining feature of industrial strategy. For HR leaders, the priority should be operational stability. That cannot exist without workforce stability.
Manufacturers that integrate talent intelligence, team cohesion and cultural alignment into their de-risking strategies will gain more than supply chain control. They will build organisations capable of adapting, sustaining performance and thriving through change.
Our latest guide explores how to secure talent and build cohesive teams through nearshoring operations. Download below to gain practical insight on how to de-risk nearshoring through people and position HR as a central driver of business success.
Download now: The HR Leader’s Guide to Nearshoring