Repeated supply chain shocks have created a generational shift in global sourcing. The majority (67%) of participants in Bank of America’s 2020 Global Fund Managers study think that localization or reshoring of supply chains will be the most dominant structural shift in the post-COVID world. A 2020 survey of analysts who cover upwards of 3,000 companies from Bank of America Securities found a “tectonic shift in global supply chains." The quotes below show that leading manufacturing and financial business experts agree. “While Covid has acted as a catalyst to accelerate this change, the underlying reasons are grounded in a shift to ‘stakeholder capitalism,' concluding relocation favors a broader community of shareholders, consumers, employees, and the state.” Candace Browning Head of Global Research, Bank of America — CNBC, August 2020 — “With the pandemic, it really has radically shaken the supply chain. It does drive home the importance of our strategy of getting closer to where we sell. The more you can minimize the amount of time your product is in transit, the better off you're going to be.” Don Allan CFO, Stanley Black & Decker — Washington Post, November 2021 — Three bills passed by Congress since 2021 are designed to fuel growth, secure vulnerable supply chains, manage the threat of climate change, and boost U.S. competitiveness. The $280 billion Chips and Science Act , the $700+ billion Inflation Reduction Act and the $1+ trillion Bipartisan Infrastructure Bill are investments in our national security, energy security, infrastructure, and economic competitiveness — including $300 billion in deficit reduction. For example, Intel is investing $20 billion in two new chip factories in Ohio, $3.5 billion to upgrade its New Mexico manufacturing campus, and $20 billion in two new chip factories in Arizona. Lam Research Corp., a manufacturer of chip production equipment, announced plans to open a new factory in Sherwood, Oregon. Oil reserves have defined geopolitics for the last five decades. Where the fabs [semiconductor factories] are for a digital future is more important. Let’s build them where we want them, and define the world that we want to be part of in the U.S. and Europe.” Pat Gelsinger CEO, Intel — CNBC, March 2022 — Sixty-four percent of U.S. companies surveyed said they expected to acquire or build more domestic production in response to anticipated policies incentivizing reshoring. Automakers are accelerating U.S. investment in electric vehicle (EV) and battery cell manufacturing. The global auto industry plans to spend a combined $526 billion on electric vehicles (EVs) through 2026. U.S. investments planned for lithium-ion battery factories now exceed$40 billion, creating a “gigafactory boom.” Michael D. Plante Senior Research Economist and Advisor — Federal Reserve Bank of Dallas, October, 2022 — “Aligned with our longstanding commitment to build products close to the customer, Honda is committed to the local procurement of EV batteries which is a critical component of EVs.” Toshihiro Mibe CEO, Honda — CNBC, August 2022 — “This reshoring, nearshoring, whatever they’re calling it this week is real, and we’re pumped up about it. It’s going to fit right in our wheelhouse.”Jim Hoffman CEO, Reliance Steel & Aluminum Co. — Bloomberg, November 2022 — Bank of America 2022 data shows the use of the term ‘reshoring’ escalated to a record level. “Companies' mentions of reshoring skyrocketed recently amid supply chain challenges and we believe the 2020s will mark the beginning of de-globalization.” Savita Subramanian, Bank of America equity and quant strategist — Wall Street Journal, July 2022 — “I’ve always said, this is just economics, people are going to realize that the savings they thought they had aren’t real, and it’s going to be better and cheaper to make them here.” Kevin Nolan CEO, GE Appliances — Bloomberg, July 2022 — In 2022, the Russian invasion of Ukraine and the continuing supply chain disruption pushed reshoring to the highest rate ever recorded. A 2022 study by Capgemini found that as a result of global trade relocation, the split between global and local suppliers would shift from the current 57% to 43% respectively, to exactly the reverse in three years. “We see that America will be untouched by what’s happening in Europe, so it should be geo-strategically a region in which we should invest more.” Herbert Diess CEO, Volkswagen — Wall Street Journal, May, 2022 — “The supply chain challenges of the past year have demonstrated the importance of increasing our domestic manufacturing capacity as quickly as possible.” Annette Clayton CEO and President, Schneider Electric North America — PR Newswire, February 2022 — “Strategic sourcing may be considered as local, to ensure there is no dependence on any war constrained countries or vulnerability to supply chain disruptions, such as the recent blockage of the Suez Canal.” Houssam Hage Senior VP of Supply Chain, Stellantis — Supply Management, January 2023 — A late December 2022 nationwide survey by Forbes, Xometry, and Zogby found that despite supply-chain disruption, inflation, and fears of a recession, 95% of manufacturing executives say they’re optimistic. “CEOs recognize that tapping into America’s vast manufacturing infrastructure can help solve most of the world’s supply chain problems. As they bring production back to the States, CEOs are also modernizing shops across the country, deploying digital workflow technologies, investing in new processes, and embracing automation.” Randy Altschuler CEO of Xometry — Manufacturing Tomorrow, January 2023 — Do you work for one of the companies quoted above? Are you or your customers selling to these companies and finding that you are competing with imports? If so, point out the quote by the company leader and offer to help achieve their vision of more domestic sourcing. For help doing so, or to report your successes, contact me at 847-867-1144 or harry.moser@reshorenow.org. Given the forces behind reshoring, the time to act is now.
Repeated supply chain shocks have created a generational shift in global sourcing. The majority (67%) of participants in Bank of America’s 2020 Global Fund Managers study think that localization or reshoring of supply chains will be the most dominant structural shift in the post-COVID world.