The Strategic Case for Investing in Supply Chain Reshoring: A 2025 Outlook

The global supply chain landscape is undergoing a seismic shift in 2025, driven by a confluence of geopolitical tensions, policy interventions, and technological advancements. As companies recalibrate their operations to prioritize resilience over cost efficiency, the relocalization of manufacturing and logistics has emerged as a defining trend. For investors, this transformation presents a unique opportunity to capitalize on firms at the forefront of reshoring and nearshoring initiatives. The TCW Transform Supply Chain ETF (SUPP) is one such vehicle, strategically positioned to harness the tailwinds of this generational shift.

The Drivers of Reshoring: Policy, Geopolitics, and Resilience

The push to relocalize supply chains is no longer a niche strategy but a necessity. According to a report by Fictiv, 68% of industry leaders in 2025 have prioritized onshoring as a key component of their supply chain strategy, a figure that underscores the urgency of reducing dependency on globalized networks. This shift is fueled by escalating trade tensions, particularly with China, and the implementation of tariffs that have made offshoring increasingly costly. For instance, U.S. labor costs, averaging $25 to $30 per hour, remain a significant hurdle for reshoring, but these costs are being offset by automation and AI-driven production systems that enhance efficiency and reduce lead times. According to Deloitte, automation and AI are further reducing the cost barriers to reshoring.

Policy tailwinds further amplify this trend. Governments are incentivizing domestic manufacturing through subsidies and infrastructure investments, creating a fertile ground for companies that align with these objectives. The 2025 Thematic Outlook by TCW highlights how North America is uniquely positioned to benefit from this relocalization, as firms seek to mitigate risks associated with global supply chain disruptions.

Technological Enablers: Digital Twins, Microfactories, and IIoT

The feasibility of reshoring is being revolutionized by advancements in industrial technology. Digital twins and the Industrial Internet of Things (IIoT) are enabling companies to simulate and optimize production processes in real time, reducing the complexity of onshoring. Meanwhile, microfactories-smaller, automated, and decentralized production units-are gaining traction as a cost-effective solution to meet localized demand. According to industry analysis, these innovations not only shorten supply chains but also enhance agility, allowing firms to respond swiftly to market fluctuations.

Automation and AI are further reducing the cost barriers to reshoring. According to Deloitte, by integrating predictive maintenance and real-time analytics into production workflows, companies can achieve higher output with lower labor inputs. This technological pivot is critical for overcoming the labor cost disparity between the U.S. and countries like China, making reshoring economically viable in the long term.

Challenges and the Path to Long-Term Value

Despite these advancements, reshoring is not without its challenges. Workforce development and supplier ecosystem gaps remain significant hurdles. Building a skilled labor force and fostering regional supplier networks require sustained investment and collaboration. However, these challenges also represent opportunities for firms that can provide the infrastructure and training needed to support a resilient domestic supply chain.

This is where the TCW Transform Supply Chain ETF (SUPP) shines. As an actively managed fund, SUPP targets companies that are not only adapting to reshoring but also enabling it. Its portfolio includes leaders in industrial automation, materials, and logistics-sectors critical to the relocalization of manufacturing. For example, the fund's top holdings, such as NVIDIA Corporation (8.31%) and Eaton Corporation (6.70%), reflect its focus on firms that supply the technology and infrastructure underpinning the reshoring boom.

SUPP's Strategic Alignment with 2025 Trends

SUPP's investment strategy is explicitly designed to capture the multi-trillion-dollar transformation in global supply chains. By concentrating on large-cap stocks (86% of its assets allocated to this segment), the ETF leverages the scale and stability of industry leaders while maintaining flexibility to adapt to rapidly evolving trends. Its active management approach allows it to pivot quickly toward high-conviction opportunities, such as companies expanding North American manufacturing facilities or developing AI-driven supply chain solutions.

The fund's emphasis on infrastructure is particularly noteworthy. As reshoring accelerates, demand for new facilities, advanced machinery, and regional logistics networks is surging. SUPP's holdings in firms like Martin Marietta Materials and Waste Connections position it to benefit from this demand, as these companies supply the materials and services essential to building a domestic manufacturing ecosystem.

Conclusion: A Generational Investment Opportunity

The reshoring movement is not a temporary correction but a structural shift in how goods are produced and distributed. For investors, the key to long-term value lies in identifying firms that are both adapting to and enabling this transformation. The TCW Transform Supply Chain ETF (SUPP) offers a compelling vehicle to achieve this, with a portfolio that mirrors the technological, policy, and economic drivers of the 2025 reshoring wave. As global supply chains continue to relocalize, SUPP is well-positioned to deliver returns for those seeking to capitalize on this generational shift.