Production bottlenecks, labor shortages and geopolitical security considerations have driven renewed interest in shortening supply chains and automation. Furthermore, government policies in nearly all global regions increasingly seek to promote domestic manufacturing and modernize an aging capital stock. For instance, US Infrastructure and Investment & Jobs Act from 2021 provided USD550 billion in net new funding, the 2022 Chips and Science Act provided USD39 billion in direct funding for US semiconductor manufacturers, and the 2022 Inflation Reduction Act added USD370 billion in funding and incentives for clean energy production and manufacturing. As a result, there is renewed interest in reshoring manufacturing facilities closer to home. According to Bloomberg, mentions of reshoring and related terms like ‘near-shoring’ in corporate announcements and event transcripts rose 23% year-over-year during 3Q23, and year-to-date are up more than 11-fold from pre-pandemic 2019. These announcements dovetail with October data in US where investment in manufacturing sector construction rose 62% year-on-year to USD 198.9 billion, bringing the year-to-date figure to USD 1.7 trillion, an increase of 89% versus the same period last year.
Source: Bloomberg, November 2023