In the wake of the COVID-19 pandemic, the world experienced a seismic shift in global supply chains and trade dynamics. The concept of deglobalization gained traction as countries sought to reduce their dependence on distant sources of production and materials. A significant result of this trend is the resurgence of reshoring, where companies move their manufacturing and production back to their home countries. In this article we examine the concept of deglobalization and the resurgence of relocation to Germany as a prime example of this phenomenon.
The rise of deglobalization
Deglobalization is the process by which countries and companies reduce their dependence on global supply chains and foreign markets. It has gained importance for several reasons, including national security concerns, a desire to create jobs at home and the vulnerabilities exposed by the pandemic. Deglobalization is not synonymous with isolationism; Rather, the aim is to strike a balance between global engagement and domestic resilience.
A key driver of deglobalization was the recognition of the vulnerabilities of extensive global supply chains. For example, in the early days of the pandemic, countries faced shortages of critical medical supplies and personal protective equipment, highlighting the risks of relying on foreign suppliers. Companies and governments began to reassess the concentration of production in distant locations.
Reshoring as a strategic move
“Reshoring”, i.e. the relocation of production and manufacturing to a company’s home country, has become a strategic step in the age of deglobalization. Germany, known for its strong industrial base and engineering prowess, has been at the forefront of this trend. Companies in Germany have recognized the benefits of reshoring, which range from improved quality control to shorter lead times.
A key advantage of reshoring to Germany is the emphasis on quality and precision. German manufacturing is known for its pursuit of excellence and reshoring allows companies to maintain greater control over product quality. This is particularly important for industries such as automotive, where even minor defects can have serious consequences.
Another compelling reason for reshoring to Germany is to shorten throughput times. By locating production facilities closer to their main markets, companies can respond more quickly to changes in consumer demand. This agility is becoming increasingly important in a world where consumer preferences can change quickly.
Examples of reshoring to Germany
Several well-known companies have welcomed the relocation back to Germany as a strategic step. A notable example is Siemens, a global leader in electrification, automation and digitalization. In recent years, Siemens has announced plans to invest in moving production of high-tech devices and components to Germany. This move not only strengthens the company’s commitment to quality, but also enables it to respond more effectively to changing market demands.
There was also a revival of reshoring in the automotive industry, a cornerstone of the German economy. BMW, one of the country’s most important automobile manufacturers, has invested in expanding its production capacities in Germany. By relocating certain manufacturing processes, BMW wants to increase the flexibility of its production network and ensure that it can quickly adapt to changing market conditions.
In addition, the pharmaceutical industry has not been spared from the reshoring trend. The COVID-19 pandemic has highlighted the importance of robust pharmaceutical manufacturing capabilities within national borders. As a result, companies such as Bayer and Merck have announced plans to relocate certain pharmaceutical manufacturing processes to Germany in order to strengthen the country’s pharmaceutical industry and its ability to respond to future health crises.
In a world characterized by uncertainty and rapid change, the concept of deglobalization has gained traction as countries and companies seek to mitigate risks and strengthen domestic resilience. Reshoring, exemplified by the robust German manufacturing sector, has emerged as a strategic move that offers numerous benefits, including improved quality control, shorter lead times and greater agility in responding to market dynamics.
The resurgence of relocation to Germany underscores the country’s reputation for precision and innovation. Companies across industries have recognized the benefits of moving production closer to home, aligning with the principles of deglobalization while maintaining a global focus.
As the global landscape continues to evolve, it is likely that the trend towards reshoring will continue, with Germany serving as a shining example of how a country’s manufacturing expertise can contribute to its economic resilience and competitiveness on the world stage. As companies re-evaluate their supply chain strategies in the post-pandemic period, relocating to Germany is likely to remain a compelling and strategic decision.