For decades, globalization guided production choices. Companies relocated their factories to take advantage of lower labor costs, suitable infrastructure, or fragmented supply chains . Producing faster and cheaper was the rule. Yet, successive crises, from the COVID-19 pandemic to geopolitical tensions and the environmental emergency, have revealed the flaws in this model: long chains, vulnerable to abuse, and often lacking transparency.
Today, one word is gaining traction: relocation . It's not simply about bringing factories back home, but about rethinking the production model and the relationship with the market. Relocation and local production offer strategic, economic, environmental, and social advantages, while also meeting growing consumer expectations for ethical and sustainable products.
If you're too lazy to read everything
🧳 Companies have relocated to drastically reduce their production costs (up to -70%) and take advantage of more specialized globalized supply chains.
⚠️ Offshoring has weakened supply chains, reduced transparency and led to the loss of local know-how, particularly in textiles.
🏭 Relocation involves bringing back all or part of the production to regain control, reduce vulnerabilities and improve responsiveness.
💡 Relocating allows us to be more agile, strengthen resilience, reduce our carbon footprint and support local economies.
💸 This model, however, involves higher costs, significant investments and more complex logistics.
🧵 In textiles, bringing production closer together allows for better traceability, fewer emissions and more innovation thanks to modern technologies.
🇪🇺 The example of Prato shows that European production is not automatically ethical, with cases of exploitation and opaque subcontracting.
Why did companies relocate?
Offshoring was not a random occurrence. It was driven by clear economic logic. Labor costs were long the primary factor: producing in certain Asian or Eastern European countries reduced production costs by 30 to 70% compared to Western Europe. These savings were crucial for remaining competitive in international markets.
But companies weren't only looking for cost savings. Some aimed for proximity to new markets or access to specialized industrial ecosystems. Others exploited the fragmentation of value chains , where each stage of production takes place in a different country: fabrics produced in India, dyeing in Bangladesh, assembly in Vietnam, then export to Europe or North America.
According to the European Central Bank, nearly 50% of European companies have relocated at least part of their production in the last five years. This strategy has led to significant economic gains, but it has also created a dependence on long supply chains, which are vulnerable to crises and logistical fluctuations.
The negative impacts of offshoring
While offshoring has long been a way to reduce costs, it has also weakened companies. By dispersing production across multiple continents, supply chains have become longer , more expensive , and more difficult to control . This complexity reduces transparency , particularly regarding working conditions, environmental impact, and the quality of materials, making audits and traceability more uncertain.
Offshoring has also weakened some local industrial bases, leading to the gradual loss of expertise and thousands of skilled jobs in several European sectors. In the textile industry , these problems are particularly visible: opaque supply chains , cascading subcontracting, and significant variations in social standards .
What is relocation?
Relocation means bringing back part or all of production to the country of origin or to geographically close areas. The concept goes far beyond simply moving factories. Several strategies can be distinguished:
- Reshoring : complete return of production to the national territory.
- Nearshoring : transferring to countries close to the final market to reduce delays and logistics costs.
- Friend-shoring : settling in politically and economically stable countries.
Complete relocation remains rare; most companies opt for partial or gradual relocation, combining local production and imports. This hybrid model reduces risks while retaining some of the economic advantages of offshored production.
The main objective is to reduce vulnerability , better control production, and improve responsiveness. The European Central Bank notes that 42% of large European companies are planning relocation strategies within the next five years, indicating that this trend is set to intensify.
The advantages of relocation and local production
Relocation offers several strategic and operational benefits. First, it enhances the responsiveness and flexibility of businesses. Producing closer to markets allows for rapid adjustments to volumes, responses to seasonal variations or emerging trends, and reduced supply times.
Secondly, it improves the resilience of supply chains . Recent crises have shown that international transport can be blocked or slowed, leading to shortages and financial losses. Local production reduces these risks and allows for better control of inventory and quality.
Relocation also has an environmental and ethical dimension. Reducing the transport of goods over thousands of kilometers limits CO₂ emissions. It facilitates traceability and compliance with local social and environmental standards. According to the European Commission, shorter supply chains contribute to more sustainable textile production and a more responsible use of resources.
Finally, it can support local employment and preserve expertise. Even if the number of jobs created remains limited by automation, relocation makes it possible to maintain strategic skills and develop local sectors, thus strengthening the local economy.
For example , at Lucid, we prioritize collaborations As local as possible. Having our production stages within a limited area allows us to ensure that production conditions meet a strict list of criteria, but above all, it allows us to regularly visit our manufacturers . In fact, since they're so close, we can visit them several times a week… At this rate, they'll end up knowing us better than their production schedule.
The challenges and limitations of relocation
Despite its advantages, reshoring presents major challenges. The most obvious is the higher cost of production . Wages and social security contributions in Europe are significantly higher than in low-cost countries. This often necessitates repositioning products in premium segments and accepting lower profit margins.
The initial investments are also substantial. Factories need to be modernized, teams trained, technical skills rebuilt or strengthened, and sometimes an entire industrial ecosystem reconstructed. These efforts take time and require rigorous strategic planning.
Hybrid models, combining local production and imports, complicate logistics . Coordination becomes a challenge, particularly in harmonizing quality standards and maintaining consistent delivery times. Furthermore, job creation often remains lower than the losses incurred during previous offshoring. But we haven't had our final say yet!
Finally, relocation may require marketing and strategic repositioning and consumer education, particularly to justify higher prices and to raise awareness of the importance of putting sustainability, quality and ethics at the heart of production thinking.
At Lucid, we make a special effort to educate consumers about the impact their purchases can have and the true costs behind a garment . We are transparent about our entire production chain and the breakdown of our prices. We want to encourage consumers to support real values with their money and remind them that when you pay too little for a product, someone else always pays the price.
Relocation in the textile and fashion industry
The textile industry perfectly illustrates the challenges of relocation. It is a highly globalized and polluting sector, producing over 12 million tons of textile waste in Europe each year, a large portion of which is not recycled. Production chains are fragmented, difficult to trace, and heavily dependent on countries where labor costs are very low.
Bringing production closer to home reduces the carbon footprint associated with transportation, but more importantly, it allows for better control over quality, working conditions, and the environmental impact of clothing. This also creates local jobs, revitalizes industries weakened by offshoring, and boosts the European economy.
Furthermore, producing in Europe allows companies to capitalize on historical expertise while integrating modern technologies and circular practices. This offers a significant competitive advantage: local production becomes a credible marketing argument and a reputational driver, enhancing the value of ethical and environmental commitments in the eyes of consumers.
European textile production… but not automatically more ethical
When we think of European textile production, we spontaneously imagine a more ethical, better-controlled manufacturing process that conforms to European social standards. However, some regions demonstrate that geographical proximity does not automatically guarantee responsible practices. The example of Prato , Italy, is the most striking illustration of this. This textile district, one of the most important in Europe, has for several years hosted workshops managed by members of the local Chinese community.
Investigations conducted in these workshops reveal a completely different side of “Made in Italy”: workers toiling up to 12 hours a day for around 3 euros an hour , sometimes without formal contracts or social protections. This example demonstrates very concretely that geographical relocation does not automatically guarantee ethical, or even fully transparent, production .
For a relocated model to be truly responsible, it must be accompanied by rigorous monitoring of working conditions, strict control of subcontractors, and complete traceability . It is this consistency between proximity, transparency, and responsibility that determines the true value of local production.
Conclusion
Relocation and local production are not a step backwards, but a strategy for the future . They help to secure supply chains, strengthen responsiveness and resilience, improve sustainability and traceability, and preserve or create local skills.
For the textile and fashion industry in particular, relocation offers a unique opportunity to reconcile performance, innovation and ethics , while meeting consumer expectations for responsible and transparent products.
Companies that anticipate these changes will be able to turn this challenge into a strategic advantage, combining local production and smart globalization to build a more resilient, agile and sustainable supply chain.
At Lucid , this vision is at the heart of our approach. We believe that local production only makes sense if it is also responsible, ethical, robust, and transparent . That's why we only collaborate with partners we can meet, visit, and truly get to know. Our workshops are chosen for their best practices, not just their location.
Source
- Attinasi, M.G., Ioannou, D., Lebastard, L., & Morris, R. (2023). Global production and supply chain risks: Insights from a survey of leading companies . Economic Bulletin, Issue 7/2023, European Central Bank. https://www.ecb.europa.eu/press/economic-bulletin/focus/2023/html/ecb.ebbox202307_01~2a0bcf0b48.en.html
- European Commission. (2022). EU Strategy for Sustainable and Circular Textiles . https://environment.ec.europa.eu/strategy/textiles-strategy_en
- European Commission. (2020). Circular Economy Action Plan . https://environment.ec.europa.eu/strategy/circular-economy_en
- Franceinfo. (2024). Italy: The hidden side of Prato's workshops, the temple of European fast fashion . https://www.franceinfo.fr/monde/italie/italie-la-face-cachee-des-ateliers-de-prato-temple-de-la-fast-fashion-europeenne_7503859.html
- Hookway, P. (2024). Understanding reshoring: a strategic shift in manufacturing . ProcurementPro. https://procurementpro.com/understanding-reshoring-a-strategic-shift-in-manufacturing/
- RTBF. (2022). Did the relocations and job creations promised during Covid take place? https://www.rtbf.be/article/les-relocalisations-et-creations-d-emplois-promises-pendant-le-covid-ont-elles-eu-lieu-11332719
