An acceleration in strategic reshoring moves by businesses worldwide to shift operations and supply chains closer to their home or main markets is revealed in new research from Bain & Company.
Amid intensified geopolitical uncertainties and rising costs, analysis from Bain’s biennial operations survey of CEOs and chief operating officers shows a further rise in companies planning, or already investing in and executing, reshoring and near-shoring. The research also revealed the emerging trend of “split-shoring,” where businesses balance a mix of offshore production with other key manufacturing activity close to home.
The proportion of CEOs and COOs reporting their companies have plans to bring supply chains closer to market has risen to 81%, up 18 percentage points from 63% in 2022, according to Bain’s findings. This comes alongside almost two-thirds (64%) of executives surveyed reporting investment in split-shoring (46%) or near-shoring (18%). Only 36% report further investment in offshoring, meanwhile. However, the findings also show reshoring efforts also have much further to run, with only 2% of companies reporting having fully completed their plans.
Bain’s operations survey gathered views from 166 CEOs and COOs, with 90% managing businesses with revenues in excess of $1 billion, more than half at companies with revenues above $5 billion, and two-fifths with $10 billion-plus revenues.
The acceleration of reshoring trends underlines how heightened geopolitical turbulence and pressures for greater sustainability and reduced carbon footprints, alongside the post-pandemic goal to deliver greater resilience in supply chains, have disrupted the previous business rationale for low-cost offshore manufacturing hubs, tilting the balance towards operations closer to home markets.
“We believe the current acceleration of reshoring across key markets worldwide is a crucial trend that demands CEOs’ attention,” commented Hernan Saenz, Bain & Company partner and global head of the firm’s Performance Improvement practice. “The multiple disruptions companies have grappled with since the pandemic mean the question for company leaders is no longer whether to reinvent supply chains but how to do that so their operations are made more cost-competitive, resilient, sustainable, and agile in responding to evolving markets and customer needs.”
China Factors, U.S. Inflation Reduction Act Fuel Trends
Reshoring is being reinforced by deglobalization trends, with apparent concerns over decoupling of economic blocs contributing to a rise of more than 25% in the proportion of companies seeking to reduce dependence on China, according to Bain’s analysis. The proportion of companies reporting moves to shift operations out of China has risen to 69% in 2024, from 55% in 2022, the survey shows.
In the U.S., where 39% of respondent businesses are based, the findings also point to reshoring having been further stimulated by the Inflation Reduction Act (IRA) of 2022. The IRA offers U.S. companies subsidies and tax credits to incentivize reshoring and near-shoring to boost domestic manufacturing and job creation – particularly in sensitive markets, such as those for semiconductors, clean energy technologies such as solar panels and wind turbines, and electric vehicle supply chains.
Findings point to reshoring having been further stimulated in the U.S. by the Inflation Reduction Act and CHIPS and Science Act, both enacted in 2022.
Moves toward reshoring of semiconductor manufacturing have also been intensified by the U.S. CHIPS and Science Act, which put in place tax incentives and $52 billion in funding to stimulate U.S. domestic production of chips – as well as surging AI-driven demand for graphics processing units (GPUs). Bain’s recent Global Technology Report forecasts that demand for key GPU components could increase by 30% or more by 2026, potentially triggering an AI-induced chip shortage.
“The powerful forces driving the patterns of re-shoring, near-shoring and split-shoring that our findings show will persist and confront company leaders with the challenge and opportunity of transforming their supply chains for reshaped global markets,” said Adam Borchert, Bain & Company partner in the firm’s Performance Improvement practice and global lead of its Supply Chain practice. “We are helping clients to navigate these shifts and build supply chains that meet market needs, are resilient and future-proofed, while strengthening management capabilities to adapt to further change in an uncertain world of constant turbulence.”
