Reshoring and Onshoring
Bringing manufacturing back to the US and Europe is driving demand for factory automation and industrial equipment.
Supply-chain risk, tariffs and government incentives such as the IRA and CHIPS Act are pushing companies to move factories back to the US and Europe. Since 2022 roughly 1.85 trillion dollars has been mobilized across the IRA, CHIPS and infrastructure bills, including about 450 billion in private semiconductor investment. Because domestic labor is expensive, these new plants are heavily automated, giving suppliers of automation, electrical equipment and industrial infrastructure a multi-year tailwind.
Mechanism
Building a factory in a high-wage country means offsetting higher labor costs with automation, robotics and sensing. As a result, much of the reshoring spend goes not into jobs but into equipment: scanners, machine vision, RFID, conveyance, pumps and electrical components. Suppliers of that equipment earn regardless of which individual brand ends up producing in the US.
Catalysts
Persistent tariffs on steel, aluminum, semiconductors and other imports make offshore production costlier and accelerate the shift home. The semiconductor construction boom, with about 450 billion dollars of committed private investment, drives direct equipment orders. Studies show reshoring announcements up roughly 53 percent versus prior levels, which can support future order intake.
Risks
Despite many announcements, US manufacturing employment has slipped slightly since the broad tariffs took effect, suggesting reshoring is slower than headlines imply. High interest rates, permitting backlogs and skilled-labor shortages can delay projects. A shift in trade or subsidy policy could also weaken the government incentives.
Time horizon
This is a multi-year theme: factory and semiconductor projects from the 2022 to 2025 incentive programs move into construction and equipping across the rest of the decade. Near term, order intake swings with rates and the business cycle, but the structural shift is likely to persist well into the 2030s.