Jacopo Dettoni is the editor of fDi.

Every story has two sides.  

German semiconductor equipment producer Aixtron created a buzz when it announced a new production site in Orbassano, Italy. “We expect strong benefits for all the parties,” said Felix Grawert, the CEO of Aixtron, in a press conference on June 3. 

The announcement also sealed the fate of the 57 workers employed by automotive supplier Av-El in the production facility that Aixtron acquired, which is slated to close by year-end to make way for the new project.

In the grand scheme of things, it will be a net win for the region. Aixtron injects €100m in the local economy, creating 300 new jobs along the way, including 100 engineers, and deepens the regional cluster of the highly strategic semiconductor industry. In the short term, though, Av-El and its workers, who produce plastic components for automotive original equipment manufacturers, become collateral damage.

The four walls of this inconspicuous production facility encapsulate the tension that is running through the whole European industry, whose trajectory remains a tale of two realities. 

The reshoring of strategic sectors — from semiconductors to critical minerals and pharmaceuticals — is a game-changer for sectors where investment has languished for years. A handful of multi-billion-euro projects promise to change the course of local economies and secure the strategic interests of Europe as a whole. The soaring value of foreign direct investment announcements in the European manufacturing sector provide a good gauge of this rising sentiment.  

The flipside is the ongoing restructuring of legacy sectors, which often leads to closures and deindustrialisation. It’s a phenomenon that is often hard to pin down and isolate with clarity. Aggregate divestment data is rare to come by. At a more micro level, it is typically a big deal when a big factory shuts down. But the fate of the thousands of small and medium-sized companies active in the value chain of ailing industrial sectors often goes unnoticed — companies like Av-El. 

There is one piece of data evidence, though, that provides glimpses into the trajectory of European manufacturing: factories across EU countries employed 3.1 million fewer workers in 2023 than they did in 2008, which represents a 9% decline over the period, according to Eurostat data. The dip spread relatively evenly across western and eastern EU members. 

It’s fair to say that these big reshoring projects have been a shot in the arm for ailing local industrial communities. But until they get past the construction stage and start generating both direct and indirect employment, it’s difficult to see the industry’s long-term employment decline reverse. And even then, the level of automation will be such that the numbers and the nature of the jobs created will be different to those of the past. 

The perception of a new golden age of the European industry may well be shaping up. For once, though, perception is not reality as of yet — not in Orbassano, nor elsewhere in Europe.

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This article first appeared in the August/September 2024 print edition of fDi Intelligence.