Page 26 - TACC 2025 Program

Building Resilient Supply Chains:

Why Private Equity Firms Are Embracing

Nearshoring in Manufacturing

It’s no secret that today’s supply chains are under more pressure than ever. From trade wars to shipping
delays and even natural disasters, disruptions seem to lurk around every corner. For private equity firms
investing in manufacturing, this isn’t just a headache—it’s a serious risk to their bottom line.

That’s why many are looking closer to home—literally—and discovering the game-changing benefits of
nearshoring. By bringing manufacturing operations closer to North America, firms are finding a smarter, more
resilient way to navigate today’s challenges while setting their portfolios up for long-term success.

A Proactive Approach Aligning Nearshoring
to Mitigating Risk with ESG Priorities

Nearshoring, the practice of relocating Nearshoring is not just about mitigating
manufacturing operations closer to the end operational risks—it also aligns seamlessly with
markets, offers a compelling way to reduce Environmental, Social, and Governance (ESG)
exposure to the uncertainties of global trade. priorities, an area of increasing importance
Over the past decade, the allure of offshore for private equity investors. As stakeholders
manufacturing was largely tied to cost savings. demand greater accountability in reducing carbon
However, recent disruptions have revealed footprints, nearshoring offers a tangible way to
the hidden costs of relying on distant supply demonstrate environmental stewardship.
chains. Lengthy transit times, congested ports, Relocating manufacturing closer to consumer
and rising freight costs have made traditional markets significantly cuts transportation-related
offshoring less attractive.
emissions, a major contributor to greenhouse
By moving manufacturing operations to Mexico gases. Furthermore, nearshore facilities can
or other nearshore locations, private equity firms adopt sustainable practices and energy-efficient
can streamline logistics and minimize the risks technologies more effectively than legacy
associated with international shipping delays. operations in far-flung locations. For private equity
Shorter supply chains mean fewer touchpoints firms, this dual benefit of operational resilience
where things can go wrong, ensuring products and ESG alignment enhances the long-term value
reach customers on time and within budget. of their portfolio companies.
This level of reliability is particularly critical
for private equity-backed companies, where
consistent performance directly impacts returns
and valuations.