Rethinking (De)Industrialization: A Comparative Analysis of Offshoring Strategies and Performance in European Manufacturing

For decades, European manufacturing companies have pursued offshoring strategies under the assumption that global production networks deliver superior efficiency and competitiveness. This study fundamentally challenges that assumption by examining whether European companies maintaining domestic production actually achieve better organizational performance than their extensively offshored counterparts. Through a comparative analysis of European manufacturing companies across automotive and textile industries, this research reveals a productivity paradox that undermines conventional offshoring theories. Companies maintaining substantial European production outperform those with extensive offshore operations. The productivity advantages are particularly evident, with European-focused companies generating substantially higher revenue per employee while simultaneously investing more heavily in research and development and in the employees. The findings expose what this study terms "elective deindustrialization"—a self-inflicted process where European companies systematically destroy their own competitive capabilities in pursuit of illusory cost savings. Companies maintaining European production demonstrate superior innovation intensity, achieve dramatically lower employee turnover and invest more substantially in workforce development, These results fundamentally challenge decades of industrial policy assumptions. Rather than representing inevitable economic forces, European deindustrialization reflects strategic choices that can be reconsidered and reversed. The data suggests that Schumacher's "Small is Beautiful" thesis may be more relevant than ever: companies like Ferrari, Porsche, and Hermès International prove that European production, when combined with innovation focused strategies, delivers superior performance across economic, social, and environmental dimensions. The implications extend far beyond individual corporate strategy to European industrial policy and the future of manufacturing competitiveness. If European companies can achieve superior performance through domestic production, then the narrative of inevitable industrial decline requires fundamental revision.