The reshoring trend – or companies shifting parts of their manufacturing and supply chains to different countries – has boomed over the last decade. There are many reasons to reshore. Some companies want to avoid rules and restrictions in certain countries or shorten supply chains to limit potential disruptions. Others may be moving manufacturing due to investments or incentives from the government. The U.S. has been one of the biggest beneficiaries. In 2022, reshoring and foreign direct investment jobs announced coming back to the U.S. is on pace hit a record high of 348,493, according to data from the Reshoring Initiative. That brings the total jobs reshored since 2010 to more than 1.6 million, according to the nonprofit, which is focused on bringing jobs and foreign investment back to the country. “The trend has been rather smooth,” said Harry Moser, founder of the Reshoring Initiative, adding that since 2019, companies have been more motivated by a fear of disruption. The trend also includes companies moving parts of their supply chains or manufacturing to different countries abroad. Much of this movement is from companies leaving China due to geopolitical issues such as tensions with Taiwan, tariffs, the zero-Covid policy and concerns over intellectual property. For example, Apple plans to begin making its iPhone 14 in India, ramping up production there to supplement its factories in China, according to a Bloomberg report. It’s also shifting production of Apple watches and Macbooks to Vietnam, according to Nikkei Asia. The trend has also brought a slate of foreign direct investment to the U.S. – for example, in 2021 Toyota announced its latest battery plant would be in North Carolina. This year, Panasonic announced it would build its own battery plant in Kansas. What’s to come Reshoring looks set to continue in the coming years, supported by the pandemic as well as private initiatives and legislation. There’s proof that companies are not only making reshoring announcements but are following through with investments, according to Patrick Van den Bossche, a partner at management consulting firm Kearney and author of its annual reshoring report. This is a positive sign that shows companies are taking reshoring seriously and that the trend will continue, even though the Kearney Reshoring Index, which measures imports of manufactured goods from low-cost Asian countries against U.S. gross domestic product, was negative in 2021. “I am seeing an increase in capital gains although it’s slowed down a little bit these last two months obviously because there are some worries about recession,” said Van den Bossche. He also noted that reshoring is coming up more frequently on company earnings calls, signaling a shift in importance. The CHIPs Act , recently signed into law by President Joe Biden , will also likely boost reshoring. The act includes $52 billion for U.S. companies producing computer chips and billions more in tax credits encouraging investment in the industry. Investing the trend There are a few ways to play the reshoring trend as it continues to unfold. Analysts covering the space generally recommend picking up stocks in companies that stand to benefit from the trend, as opposed to companies in the reshoring process. That’s because the process of reshoring can take years and might not show huge benefits for shareholders while the process is ongoing. “I generally think that the companies that benefit from the trends are the better equities,” said Chris Snyder, executive director of equity research at UBS. “There’s a lot of indirect benefits.” A few industries are likely to be winners, like industrials, robotics and automation. Some of his favorite buy-rated names are Rockwell Automation , fiber and cable maker Amphenol , connector and sensor company TE Connectivity and software test company Keysight Technologies . Other firms are betting more specifically on industrial technology companies, distributors and components providers. “We estimate that reshoring/nearshoring could drive $15 billion in incremental revenues for Industrial Distributors over the next decade,” wrote Baird analyst David Manthey in a Thursday note. “New domestic manufacturing sites would require significant incremental MRO [maintenance, repair and operations] supplies to operate, driving the majority of the upside in our view.” Baird estimates that there’s a potential for 1% incremental revenue growth over the next decade in the industrial supply sector due to the trend. Smaller additional benefits could also be seen in manufacturing construction, higher MRO prices and lower working capital, wrote Manthey. The firm said that names such as Fastenal , W.W. Grainger , MSC Industrial Direct , Applied Industrial Technologies and Wesco International should see increased maintenance, repair and operations and industrial supplies volume and price. Some companies will also see increased manufacturing facility construction such as Fastenal, Wesco, Ferguson , Core & Main and GMS . Manufacturing is also likely a winner, as are companies in the automation and robotics spaces, said Lauren Sanfilippo, an investment strategist for Merrill and Bank of America Private Bank. She also noted that there are potentially investment opportunities in foreign direct investment. “The story is not just about U.S. companies, it’s about foreign multinationals coming here,” she said, pointing to Japanese robotics companies setting up in the U.S. as an example. There may also be emerging market investment opportunities in countries where companies are moving to avoid China such as India or Vietnam. Another group at Bank of America took a different approach to screen for companies that would benefit from reshoring in May, following the war in Ukraine and risks in China and Taiwan. Its list consists of domestically oriented companies with the highest sales growth sensitivity to U.S. private nonresidential fixed investment, according to a May note from Savita Subramanian, the firm’s head of U.S. equity and quantitative strategy. The companies with some of the most exposure are below.