Nearshoring Turned Out to Mean Adding Suppliers, Not Moving Them

The supply chain conversation that began with pandemic disruption and intensified through successive tariff rounds was framed initially as relocation: production would move from distant low-cost manufacturing to nearer or friendlier jurisdictions. What most companies actually did, once the restructuring worked through, was different in a way that matters for their cost base. Rather than moving production, they added a second source in a different jurisdiction and kept the first — accepting duplicated tooling, qualification, and supplier management costs as the price of not having a single point of failure. The reasons relocation proved harder than the framing suggested are consistent across sectors. Manufacturing capability is not just factories but supplier ecosystems, trained workforces, and component availability within a short radius, and those take years to establish. Qualifying a new supplier for a regulated or safety-critical component is a multi-year process regardless of where the supplier sits. And the cost advantage of established manufacturing regions did not disappear; it narrowed. For a company facing a choice between paying more for a nearer supplier and continuing with the incumbent, the risk-mitigation answer was frequently to do both rather than to choose. The resulting cost is real and is being absorbed rather than eliminated. Running parallel supply chains means duplicated inventory, split volumes that forfeit scale discounts, and more supplier relationships to manage per component. Executives have increasingly described this not as a temporary state to be optimized away but as a permanent structural change in operating cost — the price of resilience, priced into planning rather than treated as an inefficiency awaiting correction. That framing has held even as the immediate disruptions that triggered it receded. Where genuine relocation has occurred, it has concentrated in categories where policy actively subsidized it or where tariff exposure made the existing arrangement untenable rather than merely risky. Semiconductors, batteries, pharmaceutical ingredients and defence-adjacent components have seen substantial new capacity built in North America and Europe with public support. Outside those policy-supported categories, the pattern remains addition rather than substitution — which means the aggregate trade data showing shifted flows understates how much of the original capacity is still there, still qualified, and still running.