Bring it home

Like many CEOs of sprawling multi-national corporations, the COVID pandemic has tested the jazz-hands of Blake Moret. As CEO of Rockwell Automation, purveyor of industrial automation and information technology the past few months have been a sweaty run of big decisions. That said, results this week were good. Better than expected. Resilient. Conditions are tough, but manageable. He announced he was going to pay his staff more, and reshape the business. He also said that he had noticed his customers had already started moving parts of their supply chains back to the US; citing Life Sciences and Bio-Pharma amongst the early movers. BOOM. This is a big one: reshoring. COVID has changed many things, but amongst the biggest, is the cobbling of global supply chains. Indeed, a recent BAML survey found that in over 80% of global sectors, disruption, frantic phone calls and blank stares have been the order of the day. As a result, as Moret intoned, change is afoot. Companies look at supply chains from many different angles. Whether it be growing nationalism, jobs, national security, tariff risk, rising costs or ESG benefits; and the conclusion reached is the same. Supply chains need to be moved. And COVID has clearly started to hurry up plans through the C-suite committee rooms. This will not happen overnight, but it will happen and there will be winners. Factory automation is likely to play to Rockwell’s strengths, but so too companies, like Micron, that are exposed to innovation-driven strategic sectors such as semiconductors. In an age of greater government scrutiny and stakeholder capitalism, a massive domestic capex cycle will curry the profits of others involved in building new factories or warehousing, or those that are geared into the broader hum of economic activity; companies such as the equipment rental operator, United Rentals; or modular space provider Willscot. ‘Reshoring’ is a powerful, but nuanced, long-term trend and, post-COVID, it is accelerating. Rockwell are already talking it up, others will too.