Manufacturing re-shoring continues as tensions in Europe and Asia rise

A new “reshoring” trend is set to upend global supply chains as firms look to source products — such as clothes and computer chips — closer to home, turning away from manufacturing powerhouses like China.

Mentions of “re-shoring” in S&P 500 earnings transcripts were up 128% in the first quarter against the same time a year ago, according to Bank of America — seeing higher growth than mentions of “AI”.

Moving some production closer to home is vital for sectors such as apparel, according to industry veteran Bill McRaith, who said the current supply chain model “should be destroyed”.

China, which has been at the center of global manufacturing for decade, is losing its dominance — and its factory activity declined in April and May. Meanwhile, Russia’s invasion of Ukraine and the aftereffects of the Covid-19 pandemic are continuing to disrupt shipping, meaning some companies are rethinking their sourcing methods.

At the same time, the U.S. is pushing forward with incentives for domestic manufacturing of computer chips and electric vehicle components, while the European Union has announced a 43 billion euro ($46 billion) package to boost chip manufacturing in the bloc.

Denver-based Clean Energy Associates (CEA), released a new report stating that North America became the fastest-growing regional market for planned battery cell manufacturing by the end of 2022 – an effort fueled by the Inflation Reduction Act (IRA). Meanwhile, Europe witnessed several delays and cancellations of multiple battery manufacturing projects due to costs and unfavorable policies, resulting in North America surpassing it.