“Industrial adjacency” — the term may not yet exist in economic language, but it could soon become a major trend in the US industry. It refers to a new form of cooperation between two leading industrial players, with no apparent direct connection, in which one—facing underutilization—opens its production facilities to another experiencing production bottlenecks due to overwhelming demand.
US Industry at a Crossroads: A Response to Asymmetrical Industrial Dynamics
The idea stems from a pragmatic observation: industrial revolutions are occurring with increasing speed and intensity, while transforming a production system remains a lengthy process. A production line, disrupted by rapid technological shifts or market changes, may suddenly become underused, while another is overwhelmed by a spike in demand.
This trend emerges in a context of growing industrial imbalances, where reshoring efforts and deindustrialization coexist uneasily across the U.S. manufacturing landscape. On one side, we observe major players facing structural undercapacity or even plant closures. On the other, sectors such as defense, agri-food, or nuclear energy are experiencing soaring needs.
How Industrial Adjacency Benefits Both Underused and High-Demand Manufacturers
Industrial adjacency aims to bridge these gaps by enabling the former to lend or repurpose their production resources for the benefit of the latter. A “win-win” strategy for both parties: for those in difficulty, it offers the possibility of amortizing infrastructure and maintaining employment and skills. For those overwhelmed with orders, it provides rapid access to production facilities, outsourced skills, and proven expertise, while keeping operations locally. It also limits the need for new industrial infrastructure, supporting circular economy goals and reducing the carbon footprint of industrial production.
Examples of industrial adjacency are likely to multiply. One emblematic case in Europe is the German group Rheinmetall, which plans to shift two of its automotive plants toward defense manufacturing—without fully abandoning their original activity.
Key Success Factors for Industrial Adjacency
Successfully implementing industrial adjacency requires a few key conditions. First, both companies must share common values and a long-term vision. It also implies a major cultural shift for the host company: moving from manufacturing its own products to acting as a supplier for others. This shift demands the ability to quickly adapt to different standards, regulations, and certification requirements. Finally, questions of intellectual property and confidentiality must be addressed.
Why U.S. Industry Leaders Should Pay Attention
While this transition is not without challenges, many U.S. industrial players could find value in such an approach. At a time when American industry faces increasing pressure to rebuild resilience, strengthen domestic supply chains, and respond to rising demand in key sectors—particularly defense, semiconductors, and clean energy—industrial adjacency offers a compelling avenue worth exploring. It opens the door to new forms of collaboration that can accelerate capacity expansion, preserve critical capabilities, and support a more agile and sustainable industrial base.