23008_Nearshoring Report

In October 2021, sportswear maker Salomon began production at the Advanced Shoe Factory 4.0 (ASF 4.0) in Ardoix, central France. The automated factory, which is operated by specialist in technical textiles Chamatex, is joint owned by Salomon, Babolat and Millet in a partnership of production. Salomon says that the benefits of localised production include “greater manufacturing efficiency thanks to a short circuit organization of production and logistics, allowing brands to benefit from optimal responsiveness on the European market; more flexibility thanks to the increased capacity to test new products in limited quantities; increased ability to compete globally by using robotic assembly lines; and localised production is more sustainable, which minimizes the carbon footprint”. SALOMON

In February 2023, US semiconductor producer Wolfspeed announced plans to build a EUR 3bn highly-automated, cutting-edge 200mm wafer fabrication facility in Saarland, in Western Germany, to produce silicon carbide chips for electric vehicles and industrial use. In partnership with German technology producer ZF Friedrichshafen, Wolfspeed will build the ‘fab’ on the site of a decommissioned coal plant but the plan is “dependent upon state aid approval from the European Commission as part of the IPCEI for Microelectronics and Communication Technologies framework”. WOLFSPEED For example, investment in automotive manufacturing facilities in Western, Southern & Northern European countries is likely to be driven by the transformation of production toward EVs and other alternative fuel vehicles. Automotive manufacturers are likely to continue to cluster around existing areas given the ecosystem of skills and capabilities that have developed in these areas. The development of new facilities will be governed by both economics/operational efficiency and political factors such as state financial and tax incentives to attract companies to invest. Spain appears to be attempting to establish itself as a key location for EV battery production and is allocating funds earmarked from post-pandemic recovery funds to create incentives for investment. There is a real interest from both business and government for supporting this transformation: automotive manufacturing plants for across Spain are at risk, and this new trend is an opportunity to retain employment and economic activity within the country.

These countries will also benefit where there is political support for encouraging manufacturing investment, particularly in key sectors which help to preserve and enhance technological sovereignty (such as semiconductors) and advance opportunities to meet key strategic goals (such as EV and battery production and renewal energy technologies). The EU has prescribed specific initiatives and policies to support the investment in and development of key industries, including as part of overarching policies such as the European Green Deal and within specific initiatives like the European Chips Act and the Important Projects of Common European Interest (IPCEI) initiative, the EU’s key subsidy tools to stimulate investment and reduce dependence on imports.

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