Businesses appear to be doubling down on plans to consolidate their supply chains closer to home, as leaders have prioritized moving out of China thanks in large part to U.S. tax credits for domestic clean energy, electric vehicles and semiconductor manufacturing.
Of the 166 CEOs and COOs surveyed by consulting firm Bain & Company, of which 39% were based in the U.S., more than 80% said that they have plans to bring their supply chains closer to market, while 64% have invested in either split-shoring or nearshoring their operations. That’s been driven by a variety of factors, Bain says, including heightened geopolitical turbulence, rising costs in China, pressure to reduce carbon emissions, and incentives from countries like the U.S. to reshore manufacturing efforts.
“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,” Bain partner Hernan Saenz said.
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This comes as businesses have been faced with the possibility of new tariffs from the upcoming Trump administration in the U.S. Over the course of his campaign, Trump vowed to enact 60-100% tariffs on Chinese imports, as well as 25% tariffs on all Mexican imports. Should the president-elect follow through on his proposed tariffs against Mexico, it could potentially curtail efforts from many businesses across the globe to move their operations south of the U.S. border. According to a report from the Boston Consulting Group, foreign investments in manufacturing in Mexico have risen 20% annually since 2019, as companies from Germany, Canada and Japan among others have looked to take advantage of the country’s low labor costs and proximity to U.S. markets.
