Europe's Reindustrialization Wave: Quanta, Inditex, Intel, and More Invest in Nearshoring
A wave of reindustrialization is sweeping across Europe, driven by a shift in global supply chain strategies. Companies are investing billions in new factories and production facilities, aiming to reduce costs, improve sustainability, and mitigate risks. This trend, accelerated by the COVID-19 pandemic and the war in Ukraine, is seeing a significant shift towards nearshoring and reshoring.
Taiwanese electronics giant Quanta Computer is among the latest to join this trend, announcing plans to build a new factory in Germany with over 22,000 square meters of production space. This €45 million investment aims to serve European customers more efficiently. This move aligns with a broader trend: between 2021 and 2024, around $2.4 trillion has flowed into re- or nearshoring initiatives, with another $3.4 trillion expected by 2027.
Inditex, the parent company of Zara, is also relocating larger parts of its production to Spain and Portugal. This shift aims to reduce reaction times to fashion news. Similarly, US chip giant Intel is investing €4.6 billion in a semiconductor assembly and testing center in Poland and planning a large plant in Magdeburg, forming a new European semiconductor cluster. Meanwhile, BMW is investing several billion euros in a new plant in Hungary and moving parts of its production to the Czech Republic for lower labor costs and proximity to EU markets.
HAKRO, a textile company, has chosen nearshoring to implement a circular textile economy using local processing and fiber-to-fiber recycling. Lenzing AG is realigning its production by reviewing its Indonesian site and focusing on higher-margin, high-performance fibers closer to markets in Asia and North America. In the food industry, while no direct company is named, some firms are increasing recycled material use to decrease CO2 emissions and resource consumption, indicating partial nearshoring or sustainability-driven local adjustments.
This trend is not without its challenges, but it is clear that it is here to stay. Central Europe, Southwestern Europe, Germany, and France are emerging as regional hotspots for reindustrialization, each with its own advantages. Since 2021, over 3.2 million new industrial jobs have been created in Europe, with over 40 percent of new plants working with renewable energies. Bosch, for instance, is expanding its production in Hungary and Slovakia to reduce dependence on Asian suppliers and increase flexibility towards European customers.
With over 56 percent of large European and American companies already investing in re- or nearshoring, and over 70 percent planning to do so in the next three years, it is evident that this trend is reshaping the global economic landscape. As companies seek to reduce costs, improve sustainability, and mitigate risks, the future of manufacturing looks set to be more local, more sustainable, and more resilient.
