Shoring Explained

The suffix “-shoring" is used to identify to a family of strategies through which organisations and states relocate production, sourcing, or services in response to changing economic, political, or security conditions.

The prefix attached to the term (e.g. friend, near, or ally) indicates where the operations in question have been relocated to. Collectively, the strategies mark a departure from the hyper-globalised supply chains of the 1900s and early 2000s towards arrangements more explicitly influenced by geopolitics.

The rise of shoring accelerated following a series of shocks that exposed how delicate existing supply chains were. The 2008 financial crisis highlighted how production and financing was concentrated in a limited number of locations, the Covid-19 pandemic disrupted logistics and revealed a risky level of dependence on single suppliers, while Russia’s invasion of Ukraine brought the strategic risk of economic and energy interdependence with nations with significantly opposing values and interests out into the open.

Trade disputes, sanctions, industrial policy, and concerns over national resilience have subsequently continued to force governments and corporations to take where and with whom they operate and conduct business more seriously.

Bringing production back to a company’s home country is known as reshoring. Governments have encouraged it through legislation, subsidies and other incentives, particularly in strategic sectors such as semiconductors, defence and pharmaceuticals. Automation can help offset higher domestic labour costs, while local production reduces exposure to overseas disruption. However, skills shortages and substantial investment requirements mean reshoring is usually viable only in selected industries.

The US Congress passed the CHIPS and Science Act in 2022 to reverse the decline in domestic semiconductor manufacturing capacity and reduce reliance on Asian production. Federal funding and tax incentives prompted companies including TSMC, Intel, Samsung and Micron to announce new or expanded fabrication plants across the United States. Read more.

Nearshoring keeps production international but makes supply chains regional by moving production closer to the market it serves, rather than bringing it back home. This can cut transport risks, shorten delivery times, and reduce exposure to disruption in distant countries. It can also be used to avoid incurring tariffs in the country of sale.

Since 2019, companies from Germany, Canada, Japan and elsewhere have expanded or relocated manufacturing to Mexico to serve North American customers. Mexico’s proximity to the United States, preferential access under the USMCA and relatively low labour costs made it attractive, with rising Chinese costs and US–China trade tensions further accelerating the trend. Read more.

When political alignment is more important than physical distance, governments can relocate supply chains towards trusted allies in what is known as friendshoring or allyshoring. Governments encourage companies to source critical minerals, energy and advanced technology from friendly countries, bringing security concerns into trade and investment decisions.

Since 2022, the United States has used the Inflation Reduction Act’s electric-vehicle tax credits to encourage lithium-ion batteries and components to be produced domestically or in allied countries. The policy aims to reduce dependence on China, strengthen energy security and develop a supply chain for electric vehicles and energy storage. Read more.

Rightshoring means placing each business activity in the location that offers the best balance of cost, skills, speed, security and market access. Rather than moving everything home or abroad, companies divide operations between different countries according to their requirements. Research may remain at home, specialist manufacturing may take place overseas, and final assembly may be located near customers.

Apple retains product design and other high-value functions in the United States while using suppliers and manufacturers across more than 60 countries. Rather than returning all manufacturing home, it has expanded iPhone production in India and production of other devices in Vietnam while maintaining operations in China. Read more.

Offshoring is the relocation production or services from a company’s home country to a more distant foreign market. It is usually driven by lower labour costs, access to specialist suppliers, lighter regulation or tax advantages. Unlike nearshoring, distance is less important than reducing costs or accessing capabilities unavailable at home. Offshoring was a major feature of globalisation during the 1990s and 2000s.

In 2002, British appliance manufacturer Dyson transferred vacuum-cleaner production from Malmesbury, England, to Malaysia. Founder James Dyson said rising British manufacturing and labour costs made domestic production increasingly difficult. Malaysia offered lower costs, established manufacturing facilities and proximity to Asian component suppliers, while product design and research remained in Britain. Read more.

Multishoring is the spreading production or sourcing across several countries rather than relying on a single foreign location. It creates backup capacity and allows companies to move orders when disruption, tariffs or political tensions affect one market. China+1 is one version of multishoring, although the wider strategy may involve several additional countries.

Volkswagen established its battery subsidiary PowerCo in 2022 to coordinate electric-vehicle battery production. The company is developing large battery factories in Germany, Spain and Canada, distributing manufacturing across European and North American markets. This brings batteries closer to Volkswagen’s vehicle factories and customers, improves responsiveness, reduces transport distances and limits disruption if one location encounters problems. Read more.

Rising labour costs, US–China trade tensions, tariffs, regulatory uncertainty, and pandemic-era disruptions have encouraged some companies to move production out of China. However, many are not leaving completely. Instead, they retain their Chinese operations while adding production in another country. Known as China+1, this approach reduces political, regulatory, and supply-chain risks without abandoning established factories and supplier networks.

In 2025, California-based toy manufacturer MGA Entertainment accelerated plans to move part of its production from China to India, Vietnam and Indonesia. The maker of Bratz and L.O.L. Surprise! dolls aimed to increase production outside China from roughly 10–15% to 40%, while retaining about 60% of its manufacturing in China. Read more.

Manufacturing goods within the country or region where they will be sold is known as local-for-local production. The aim is to serve customers more quickly, adapt products to local demand and reduce exposure to tariffs, currency movements and long-distance transport.

LEGO uses regional factories to manufacture toys close to its largest markets. Its Monterrey plant supplies North America, while factories in Denmark, the Czech Republic and Hungary serve Europe. The company also established production in China for Chinese consumers, creating separate regional supply chains rather than relying on one export base. Read more.

Greenshoring is the relocation of energy-intensive production or digital services to locations with abundant low-carbon electricity and favourable environmental conditions. Companies may use it to reduce emissions, meet regulatory requirements and appeal to customers seeking cleaner products. It is most commonly-conducted in regard to data centres and the production of batteries, hydrogen, aluminium and green steel.

Verne operates a data-centre campus at Keflavík in Iceland, serving organisations from Europe and North America. The company selected Iceland because its electricity comes from geothermal and hydroelectric generation, while the cool climate allows outside air to cool servers. This relocates energy-intensive computing to a location with cleaner operating conditions. Read more.

Pursuing any of the shoring strategies can make supply chains more reliable, but they often incur greater financial cost. Building extra capacity, shortening supply chains and choosing suppliers for political reasons can reduce efficiency and raise prices. Host countries may gain jobs and investment, but they also risk exposure to political disputes or withdrawal of investment - leaving them out of pocket - if strategic priorities change.

Since 2017, the EU and member governments have supported battery manufacturing through subsidies, investment programmes and favourable regulation. European capacity has expanded, but high energy and production costs, skills shortages, weaker demand and Asian competition have delayed or reduced projects. Domestic production has grown, but it still relies on Chinese suppliers. Read more.

The rise of shoring as a diversification strategy is changing how the global economy works. Companies no longer build supply chains around cost and efficiency alone - they must also consider political risk, national security and government policy. This has strengthened regional blocs, increased state involvement in industry, and made trade and investment part of wider geopolitical competition.

After Russia invaded Ukraine in 2022, Europe cut its reliance on Russian pipeline gas by reducing demand and increasing LNG imports, particularly from the United States. Governments expanded import infrastructure and prioritised supply security over cost. Dependence on Russia fell, but exposure to global LNG markets increased prices and volatility. Read more.

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