Based on a Financial Times feature published in Nikkei, this article examines the structural shift of U.S. corporations toward localization. Driven not only by politics but by automation, digital technology, and rising geopolitical risk, the move away from blind globalization began well before the Trump presidency and is likely to endure far beyond it.

For better or worse, localization is advancing.
2017-06-06
The following is from a feature article published on page 7 of yesterday’s Nikkei, in partnership with the Financial Times.
All emphasis in the text, except for the headline, is mine.
By Gillian Tett, U.S. edition editor.
U.S. companies continue to return home.
Until recently, companies such as U.S. office supplies giant 3M appeared to be champions of globalization.
The company earns 60 percent of its roughly $30 billion in revenue from overseas operations and locates 40 percent of its employees abroad.
However, CEO Inge Thulin has recently avoided referring to globalization when discussing corporate strategy.
Instead, he prefers to speak about “localization,” meaning a return home, and the advantages of doing business in a “great America.”
Last month, at the Council on Foreign Relations in New York, he said, “A few years ago we produced overseas and exported to other countries, but now we are pursuing localization and regionalization strategies.
We believe we should invest as much as possible in domestic markets.”
Similar views are heard informally from other executives.
Over the past 30 years, Western multinational corporations outsourced production to low-cost countries such as China and built global supply chains.
Today, however, U.S. executives argue for fair trade rather than free trade, indirectly demanding more favorable conditions for American companies.
This, in a sense, reflects the thinking of the White House.
By aligning themselves with President Trump’s slogan of “Make America Great Again,” executives are seeking to ingratiate themselves with the administration.
They are also trying to avoid being attacked on Twitter.
Many executives welcome the economic policies advocated by Trump.
In fact, even several months after his inauguration, executive support for the president remains surprisingly high.
Scandals surrounding the White House and controversies over withdrawal from the Paris Agreement on climate change do not seem to have dampened that support.
“The president is actively promoting economic growth.
From the perspective of doing business in the United States, that is a good thing,” Thulin argues.
There is an important trend underpinning these remarks.
According to research by the Boston Consulting Group, U.S. companies focused on building international supply chains, and in 2012, 30 percent cited China as their most promising investment destination.
By 2015, however, 31 percent planned to expand domestic production, exceeding the 20 percent that planned to increase production in China.
One reason is the relative rise in wage costs in China.
Another factor is declining production costs in the United States due to advances in automation and lower fuel prices.
A third reason is that executives have realized that building and maintaining large supply chains entails political and logistical risks.
At the end of last year, GE CEO Jeff Immelt said, “The business model of pursuing the lowest labor costs is over.”
Of course, this does not mean that large corporate executives are turning their backs on the world.
Even as they promote localization, there are reasons to produce overseas for overseas markets.
Localization is simply occurring slowly and inconspicuously.
What is important, however, is that well before Trump’s inauguration, executives had already begun to abandon their blind faith in globalization.
For better or worse, localization is advancing.
It is being driven not only by populist politicians but also by the spread of robots and digital technologies.
This trend will likely continue longer than under any particular presidency.