TSG Global Innovation Survey 2024: US & Asia Lead Reindustrialization Trend
The TSG Global Innovation Survey collects insights from over 600 executives of listed companies worldwide. The 2024 edition sheds light on the reshoring and nearshoring decisions underlying the reindustrialization trend across various industries and regions. It also gives insights into the supply chain strategies that companies have adopted in the past year and are planning for the years ahead.
Industry Trends: IT, Healthcare, and Consumer Discretionary lead the pack
According to our survey, different industries exhibit vastly varying levels of engagement with reshoring or nearshoring activities. Information Technology (IT), Health Care, and Consumer Discretionary sectors lead the way, with between 38% and 43% of companies having already reshored or nearshored business activities to their home country or neighboring countries, or planning to do so in the next three years. These figures reflect a growing recognition of the benefits of localizing supply chains to enhance operational efficiency and mitigate risks in a dynamic and complex global landscape.
On the other side of the spectrum, sectors like Real Estate (15%), Materials (16%), Consumer Staples (17%), and Financials (17%) show minimal activity in relocating business activities.
Regional Trends: Mexico, Singapore, Taiwan, and India see increasing manufacturing demand
Geographic considerations also play a crucial role. 36% of North American companies, closely followed by companies in Asia Pacific (34%), have either already relocated business activities or plan to do so in the short term. These patterns reflect the strong incentives brought on by US government spending bills over the past years, in the country’s efforts to de-risk and reduce strategic reliance on China. By comparison, Eastern and Western Europe show much less engagement, with 25% and 21% of companies planning to or having already re- or nearshored their activities.
On the country level, companies from Mexico, Singapore, Taiwan, and India see positive effects of the reindustrialization trend. These countries have seen significant inflow of manufacturing demand in recent years, in particular from US markets that consider these locations to pose less risk while still offering the benefits of lower labor costs. Indeed, the survey results indicate that US companies themselves also tend toward a positive view of the reindustrialization trend, reflecting the country’s incentive to further boost its manufacturing and industrial sectors. Chinese, Japanese, and Australian companies assess the impact as predominantly negative.
Among European companies, those from Romania and Poland report optimism over the reindustrialization trend’s implications. The results reflect these countries’ emergence as prime locations for both sourcing and manufacturing operations of re- and nearshoring European companies.
Overall, these patterns paint a highly diversified picture with regional winners and losers.
Ensuring supply chain resilience and strategic control
Turning to the motivations for relocating business activities, several key factors emerge. The survey reveals that maintaining or increasing control over strategic activities is paramount, with 85% of respondents rating it as highly or moderately important. This is followed by ensuring the availability of alternative suppliers and customers (84% highly or moderately important), and increasing supply chain resilience (80% highly or moderately important).
Other factors, such as benefiting from government incentives and regulations, and addressing labor cost issues in current and alternative locations, also play significant roles but to a lesser extent. By comparison to these factors, meeting energy transition and sustainability objectives is considered less critical, with a higher percentage of companies rating it as of medium or low importance.
Diversification of suppliers and nearshoring are most popular strategies
When it comes to concrete measures, companies have employed a variety of supply chain strategies to enhance resilience and adaptability over the past 12 months. Diversifying the sourcing of input factors emerges as the most common strategy, adopted by 64% of respondents. This approach aims to mitigate supply chain disruptions by reducing dependency on single sources and spreading risk across multiple suppliers.
Nearshoring (48%) and reshoring business activities to home markets (26%) are also prominent strategies, reflecting a shift towards localizing supply chains to gain better control and reduce lead times. Additionally, increasing inventories (25%) and relocating business activities from high-risk to low-risk, low-cost countries (19%) are notable measures.
As companies continue to navigate the growing complexities of the global supply chains, our Singularity Reindustrialization strategy identifies the applied innovations that enable US and Western economies to reindustrialize — and with this, sustained revenue growth.
About The Singularity Group
The Singularity Group (TSG) quantifies applied innovation for investors in listed equities. TSG is the initiator of the Singularity Index™ (Bloomberg ticker: NQ2045), a global, all-sector benchmark and gold standard for applied innovation. The Singularity Strategies include The Singularity Fund (UCITS Lux), Singularity Reshoring(UBS AMC), the Singularity Small&Mid (UBS AMC), and the recently launched LUKB Smart Farming (AMC). The Swiss investment advisory boutique works closely with the Singularity Think Tank, a network of entrepreneurs and academics with deep insights into innovation value chains. Their input forms the foundation of TSG’s proprietary innovation scoring system that quantifies the engagement of companies within a set of curated Singularity Sectors worldwide across all market capitalizations and industries. The Singularity Innovation Score (SI-Score; see below) defines how much value listed companies are generating through applied innovation.
The Singularity Innovation Score (SI-Score): A company’s SI-Score represents the percentage of its revenues associated with innovation. It reflects a company’s ability to create innovation- versus commoditized -business and -cash flows, and its ability to participate in technological evolution. Changes in the SI-Score are just as important as the absolute value. A company’s SI-Score relative to its overall GICS sector can say a lot about the competitive standing and ability to gain and maintain market share. Regional SI-Scores can be used to evaluate the innovation power of markets as well as to gauge companies’ standing in different regions.
