Global value chains in reverse? The rocky road to “made at home”
- Prof George Batsakis
- May 5
- 4 min read
After decades spent stretching supply lines across continents, policymakers on both sides of the Atlantic now talk about “shortening” them again. The UK’s post-Brexit government hails a “makers’ comeback”, while for some time now, Washington has openly entered a trade war aiming to coax factories back to U.S. soil, especially in activities related to important minerals and commodities such as steel and aluminium. Yet, evidence suggests that reshoring is much harder than the political slogans imply.
The global factory is sticky by design
International production today resembles what Peter Buckley[i] calls a “global factory”: a hub-and-spoke system in which brand-owning multinationals orchestrate far-flung suppliers rather than own plants themselves (see, for example, the long-lasting partnership between Apple and Foxconn). Over time, these lead firms have shed physical assets and poured capital into intangible assets, such as design, logistics software, and brand equity, resources that are hard to copy and even harder to rip out and reposition. Because the network’s value comes from geographic specialisation, Buckley argues that attempting to replicate every link of a complex chain in one high-cost economy runs straight into comparative-advantage limits.
A UK case study: the automotive “near-shoring” that never materialized
The UK’s automotive industry is often cited as evidence that reshoring is underway. In detailed interviews with Midlands suppliers, however, Bailey & De Propris (2014)[i] found the trend real but modest as only 15-16% of firms were actually moving production home, and most shifts involved specific components rather than whole lines. Companies were motivated by rising Asian wages, transport shocks, and a desire for quicker lead times, especially after disasters such as Japan’s 2011 tsunami underscored supply-chain fragility.
The study is equally clear about the roadblocks. First, UK labour remains expensive. Second, finance for tooling up local suppliers is tight. Third, a long-term skills gap in advanced machining and electronics constrains scale-up. In other words, even when cost gaps narrow, the domestic ecosystem that once resembled excellence in mass production has now shrunk over decades of offshoring. Recreating it will require years of coordinated investment, not just political encouragement. The same applies very much to most developed countries that aim to bring production back home.
Evidence from the Manufacturing Technology Centre UK Reshoring Index indicates that the UK is lagging in reshoring manufacturing, with increasing dependence on imports from Asian countries. The country is growing increasingly reliant on manufacturing imports from these low-cost Asian nations (see Figure 1).
The US’s tariff experiment
Washington chose the stick rather than the carrot. During their first tenure in the Oval Office, and specifically the years between 2018 and 2020, the Trump administration imposed Section 232 duties on steel and aluminium and sweeping Section 301 tariffs on roughly two-thirds of US imports from China. Did that stimulate reshoring? The evidence is mixed. Data from the US International Trade Commission shows that over the period 2013-2022, domestic manufacturing rose at a faster pace than the US manufacturing imports from 14 Asian low-cost economies, a signal that reshoring has started taking place (see Figure 2).
The US International Trade Commission calculates that the 301 duties cut Chinese imports by 13% but raised domestic output by just 0.4%[i]; a drop in the ocean, one could say. The USTR’s own four-year review concludes the tariffs did not lift overall manufacturing employment or wages, and that China’s retaliation erased many of the gains.[ii] Further, according to the Reshoring Initiative, companies have announced more than 2 million US jobs from reshoring and foreign direct investment since 2010, with a record surge in 2024. Yet most of these positions are still on paper. Whether they materialize depends on permit timetables, labour availability, and the longevity of policy incentives such as the Inflation Reduction Act.
Why tariffs alone cannot rebuild production
Tariffs raise input costs for downstream firms while leaving the intangibles, that is, the real “control room” of the global factory, rather untouched. Buckley notes that lead firms can switch to new offshore sites just as easily as return home, because coordination, not machinery, is their core competence. Without parallel investment in skills, finance, and infrastructure, import taxes risk encouraging “itinerant offshoring”: factories hop from China to Vietnam or Mexico rather than to Ohio or Sunderland.
The UK’s automotive story reinforces the point. Government grants for battery plants and a £245 million supply-chain initiative have helped, but evidence still shows access to skilled labour and affordable capital outrank tariffs or exchange rates in deciding location. In the US, semiconductor giants cite the same bottlenecks, thus leading Washington to pair trade measures with a $39 billion CHIPS subsidy pool for domestic fabrication.
Policy implications: selective reshoring, not self-sufficiency
Both studies imply that blanket “made at home” agendas are doomed. Instead, advanced economies should target segments where proximity adds value: final assembly that requires rapid design loops, safety-critical medical goods, or low-carbon technologies where domestic demand is growing. For these niches, tailored industrial policy, apprenticeship pipelines, low-carbon energy, and patient finance can overturn cost-benefit equations without trying to roll back globalization wholesale.
Crucially, Buckley warns that multinational hubs’ control over design and brand will likely remain, even if some stages are repatriated. Success, therefore, depends less on punitive tariffs and more on fostering ecosystems that attract those hubs’ next investment decision: world-class research universities, digital infrastructure, and predictable regulation.
Some concluding thoughts
The global factory was built over 40 years. Dismantling or rerouting it will not happen in an electoral cycle. The UK’s cautious automotive comeback and the United States’ tariff-heavy strategy show both the promise and the pitfalls of reshoring. Costs matter, but so do skills, capital, and the network logic of modern production. Nations that acknowledge these complexities, and most importantly, are capable of crafting patient, evidence-based industrial policies, stand a chance of bringing strategic pieces of the value chain home. On the other hand, those that ignore them may find that, even after the tariffs and the headlines, their supply chains are still somewhere else.
Sources
Buckley, P. J. (2009). The impact of the global factory on economic development. Journal of World Business, 44(2), 131-143.
[1]Bailey, D., & De Propris, L. (2014). Manufacturing reshoring and its limits: the UK automotive case. Cambridge Journal of Regions, Economy and Society, 7(3), 379-395.
[1]https://www.usitc.gov/press_room/news_release/2023/er0315_63679.htm?utm_source=chatgpt.com
