Reshoring: Intent, Paradox, What Comes Next

Germany's industry federation expects 15,000 industrial jobs a month to leave for countries with lower costs. One of the hosts lives near a Volkswagen plant and said those are the jobs of people who live on the same street. That was the paradox Philipp Emig of Leitmotif and Beatrix von Schröder of noa brought to their Ripple. Policy in Europe and the US now pushes to bring manufacturing home, yet Europe imports ever more from Asia.

Policy up, imports up

Philipp began with how production left. Containers, business software that lets someone in Europe run a factory in China, and China's entry to the WTO built the globalised economy. COVID, the war in Ukraine, the Red Sea and the Strait of Hormuz then showed how exposed it was. Policy followed. The EU set a target of a fifth of global chip production by 2030, and the Inflation Reduction Act built what is now the US battery belt. Yet imports from low-cost producers have shot up, Philipp said, and new European capacity is "basically still a rounding error in that global picture".

In an opening show of hands, most said reshoring was here to stay. Only one had had a customer ask for locally made components. A founder whose company sells production technology around the world was blunter. "I won't even call it intent. It's just talk," they said. China is the only region really reshoring, building full value chains with state money, and European efforts are 10 to 50 times smaller than those of China and the US. Volkswagen is closing factories, not reshoring. The founder's advice was to find the sovereign investors at The Drop and tell them that a one-billion fund does not even show on the chart. They should go 10x or 50x.

A founder turning municipal waste into chemicals disagreed. China typically floods the markets it enters, they said, and Europe cannot win in one, two or three years, so building more capacity now makes no sense. China cannot deploy capital at that speed forever either. The money should go into what Europe needs for the next investment cycle, perhaps five or ten years away, such as lower energy costs and readiness for physical AI. Someone countered that when your opponent is willing to lose a lot, you have to be willing to lose a lot to win. The founder replied that the money should still be spent, only on the infrastructure for the next phase and not on capacity.

basically still a rounding error in that global picture

Where new technology beats scale

The more hopeful voices agreed on one thing. Copying Chinese plants means losing. An investor in reshored technology said the first opportunities lie with customers who tolerate higher prices, in defence and then in national security, which points to energy. The investor is focused on semiconductor fabrication equipment, a plasma physics problem, and said only new technology can overcome China's lead in process engineering. Thirty years have shown that China will out-engineer any process a start-up copies, and the start-up will lose. A founder building plasma reactors for chemistry saw the same trap. European industry tries to mirror what China does, but without China's abundant baseload energy it cannot work, so start-ups need a different architecture.

Europe can go toe to toe with China wherever the units sold are few, another participant said, as long as it stays out of fields with heavy state subsidies.

The founders building locally described the trade-offs. A founder of an autonomous commercial vehicle company said building close to customers helps working capital and tariff stability but needs capex, and a shrinking Western workforce means designing for the right blend of automation and skilled labour. Components and materials will still come from a global supply chain. A founder making printable solar said Europe cannot afford silicon factories, which need too much energy and capital. Their process runs on food-packaging equipment, so packaging firms looking for new markets can license it and set up mini-factories near customers. Investors keep asking whether China will simply copy it, and the founder said a copy would be no cheaper. It still needs a government pull, the founder said. Japan's government has put a couple of billion into thin-film solar, and Japanese companies a couple of billion more.

The next German car

Several participants saw cheap energy as the lever for every sector. A corporate venture investor from the energy sector said Europe cannot compete on labour or feedstock, so money should go to cheaper energy and to circular approaches such as recycling. Another participant said grids for a fully electrified industry would take 10 to 20 years, so decentralised supply has to be part of the answer.

Asked what Europe's next German car might be, participants named aerospace, defence built on car-industry skills and factories, batteries driven by high energy prices, construction, heavy machinery, photonics and space. One dry voice said most Chinese people see Europe as a holiday destination, so hospitality is a big industry. The last word went to a participant who said there has never been a better time to build an engineering company, and that Volkswagen lost because it shied away from electrification. The question, they said, is whether Europe builds the right products at the right speed. The founder who called it all talk had set a test for next year's Drop: whether anything actually improved.

This Ripple was hosted by Beatrix von Schröder (noa) and Philipp Emig (Leitmotif) at The Drop 2026 on 16 September.