The opinions expressed here by Trellis expert contributors are their own, not those of Trellis.
For roughly 25 years, many professional investors had an investment playbook that favored companies that optimized global supply chains, captured labor cost arbitrage, and scaled relentlessly across borders. These structural advantages accrued disproportionately to mega-cap corporations with the resources to build complex international operations. The efficient frontier rewarded global optimization over domestic resilience.
But now, that calculus is seemingly inverting. Whether driven by great-power rivalries fragmenting the world into spheres of influence, supply chain vulnerabilities exposed by the pandemic, or industrial policy reshaping where production occurs, the direction is becoming clear: the attributes that drive corporate success are shifting. As such, an emerging global commerce regime may reward resilience over efficiency, speed over scale and supply-chain control over cost minimization.
For investors, this may create a compelling opportunity in a category that received relatively little attention during the globalization era: nimble, private, domestically-oriented companies with supply chains contained within U.S. borders or the Western hemisphere.
Why private beats public
The structural advantages of private ownership become particularly pronounced when companies need to execute multi-year transformations. Reshoring manufacturing, automating to offset domestic labor costs, vertically integrating for supply chain security — these initiatives require patient capital and longer time horizons that public market investors have historically punished.
Consider the current decision-making environment. A publicly-traded manufacturer announcing a three-year, $200 million reshoring initiative plausibly faces immediate stock price pressure, analyst skepticism about near-term margins, and potential activist investors demanding faster returns. The same company under private ownership can execute the transformation without a quarterly communications apparatus or short-term earnings management.
Private companies also enjoy decision speed that public counterparts cannot match. When tariff policies shift, supply chain disruptions emerge, or new reshoring incentives become available, private firms can pivot immediately. There are fewer board committees, limited disclosure requirements, and less investor relations considerations delaying action.
This agility premium compounds over time. In a stable global trading environment, the advantages of scale and public market access outweighed the flexibility costs. In a volatile environment characterized by tariff uncertainty, industrial policy shifts and geopolitical fragmentation, this reverses.
Why domestic beats global
Companies with U.S. or Western hemisphere supply chains possess structural advantages that extend beyond tariff insulation. Shorter supply chains mean fewer disruption points, better quality control and reduced working capital requirements. When your suppliers are within driving distance rather than across an ocean, problems get solved faster and relationships run deeper.
The regulatory and political environment increasingly favors domestic orientation as well via the CHIPS Act and Inflation Reduction Act. Companies already positioned within these value chains capture incentives that global competitors can’t access. Meanwhile, mega-cap multinationals face mounting antitrust scrutiny, forced localization requirements in foreign markets, and the political symbolism that comes with visibility.
At the same time, “Made in America” has transformed from a cost liability to a brand asset. For companies serving domestic customers, American production represents competitive advantage rather than compromise. This brand premium compounds with the operational advantages of supply chain proximity.
Why nimble beats scale
Large multinational corporations face a particular bind in this environment. Their global infrastructure — painstakingly optimized over decades — was designed for a world that may no longer exist. Restructuring requires writing off stranded capital, accepting years of margin compression, and navigating organizational complexity that slows execution.
Smaller companies face none of these legacy burdens. A $50 million revenue manufacturer with domestic operations needs no restructuring; its challenge is growth and capability building, not transformation and legacy rationalization. This is a fundamentally more attractive starting point for value creation.
The talent equation also favors nimble operators. Skilled manufacturing workers, supply chain professionals and operations talent increasingly prefer stable domestic employers over companies managing global restructurings. In a tight labor market, the ability to offer workforce stability becomes a recruiting advantage that compounds operational benefits.
Where the opportunities lie
Several investment categories merit particular attention:
- Lower-middle-market private equity focused on domestic industrials. These firms — typically $10-100 million in revenue, often family-owned, frequently operating in unsexy but essential manufacturing niches — represent the sweet spot where private ownership advantages, domestic positioning and growth potential converge.
- Private credit financing reshoring initiatives offer attractive risk-adjusted returns. Companies investing in domestic manufacturing capacity, automation and supply chain reconfiguration need capital for multi-year projects. Traditional lending often falls short for these transformational investments, while private credit providers can structure patient financing capture yields while supporting economically rational adaptation.
- Vertical integration plays deserve fresh evaluation. The globalization era favored asset-light models that contracted production to lowest-cost providers. The emerging world order rewards owning critical supply chain nodes. Companies acquiring suppliers, investing in captive manufacturing or backward-integrating into component production may sacrifice near-term returns for long-term resilience — a trade-off that patient capital can underwrite.
- Employee stock ownership plans (ESOPs) offer an intriguing structural angle. These vehicles align workforce incentives with company success, provide liquidity for founders seeking exits outside traditional private equity channels, and create tax advantages that enhance returns. In a reshoring context, worker-owners have direct stakes in the success of domestic production investments. Given that an ESOP transfers ownership in a ‘graying America’ from founder to employees, impacting wealth gaps (without changing minimum wages or benefits), the structure has bipartisan support.
Risk considerations
Of course, this investment thesis carries meaningful risks that investors must weigh. Domestic supply chains aren’t immune to disruption — natural disasters, labor shortages and infrastructure failures can affect U.S. operations as readily as foreign ones. Some critical inputs simply don’t exist domestically and can’t be reshored regardless of incentives or intent. Rare earth processing, certain semiconductor manufacturing capabilities, and specialized components may require accepting some cross-border exposure.
Policy reversibility presents another consideration. The current trajectory toward deglobalization could reverse with changed political leadership or shifting geopolitical dynamics. Companies and investors who over-rotate toward domestic positioning may find themselves disadvantaged if global trade normalization occurs. Building optionality — domestic positioning with flexibility to adapt — represents prudent risk management.
Finally, scale economies still matter. Companies must achieve sufficient size to invest in automation, attract talent and serve major customers. The opportunity lies in right-sized domestic operators, not in subscale businesses mistaking smallness for agility.
Portfolio implications
For corporate investors, this framework suggests several portfolio adjustments. For 25 years, global optimization beat domestic resilience. That’s reversing and investors who recognize this change early — and position in nimble, private, domestically-oriented companies — may capture the deglobalization dividend while building portfolios that are resilient to ongoing geopolitical fragmentation.
The opportunity isn’t without complexity or risk. But for patient capital willing to underwrite multi-year transformations, the emerging landscape favors a category of companies long overlooked: the domestic manufacturer, the family-owned industrial, the nimble private operator building supply chains designed for resilience rather than optimization. Their moment may have arrived.
