November 14, 2024
(press release)
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BOSTON—November 14, 2024—An acceleration in strategic reshoring moves by businesses worldwide to shift operations and supply chains closer to their home or main markets, is revealed by new Bain & Company research released today. 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 – as well as the emerging trend of “split-shoring,” where businesses balance a mix of offshore production with other key manufacturing activity close to home. Bain’s findings show that the proportion of CEOs and COOs reporting their companies have plans to bring supply chains closer to market has risen to 81%, up by a sharp 18 percentage points from 63% in 2022. 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 the 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. Hernan Saenz, Bain & Company partner and global head of the firm’s Performance Improvement practice, commented: “We believe the current acceleration of reshoring across key markets worldwide is a crucial trend that demands CEOs’ attention. 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, US Inflation Reduction Act fuel trends Bain’s analysis indicates that reshoring is also 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. The proportion of companies reporting moves to shift operations out of China has risen to 69% in 2024, from 55% in 2022, the survey results show. In the US, where 39% of respondent businesses are based, the findings also point to reshoring having been further stimulated by the 2022 Inflation Reduction Act (IRA). The IRA offers US 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. Moves toward reshoring of semiconductor manufacturing have also been intensified by the US CHIPS Act, which put in place tax incentives and $52 billion in funding to stimulate US 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. Adam Borchert, Bain & Company partner in the firm’s Performance Improvement practice and global lead of its Supply Chain practice, said: “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. 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.” Media contacts To arrange an interview or for any questions, please contact: Gary Duncan (London) — Email: gary.duncan@bain.com Katie Ware (New York) — Email: katie.ware@bain.com Ann Lee (Singapore) — Email: ann.lee@bain.com
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