These are some of the conclusions of the Capgemini Research Institute’s report titled ‘The Resurgence of manufacturing: Reindustrialisation strategies in Europe and the US.
According to the report, the reconfiguration of global supply chains and manufacturing capacity, including reshoring and nearshoring production, as well as diversification, is being strategically prioritised over short-term profitability.
Nearly 60 per cent of executives are determined to continue their efforts despite higher costs and 65 per cent of organisations are reducing reliance on Chinese products. Instead, they are planning to invest in so-called friendshoring over the next three years to de-risk their supply chains.
The survey, conducted from January 1st to 20th, 2025, also found that market tensions are driving large European and US organisations to accelerate their plans to diversify their manufacturing and supply chains with two thirds having an active or in-progress reindustrialisation strategy, which is up from 59 per cent in 2024.
In a statement, Aiman Ezzat, CEO at Capgemini, said: “After decades of globalisation, the imperative to reindustrialise is clear. Organisations are intensifying their efforts to de-risk and diversify their manufacturing and supply chains through friendshoring to reinforce proximity to markets.
“Complexities and costs involved in re-orchestrating supply chains are not being underestimated. Business leaders are investing to navigate the unpredictable macro-environment and drive long-term competitiveness, taking advantage of advanced technologies. In an evolving global landscape, regional collaboration with suppliers, technology providers and policymakers will be key to build a resilient and adaptable manufacturing ecosystem.”
Supply chain resilience, geopolitical concerns, and a desire to be closer to customers, emerge as the top drivers of reindustrialisation. Supply chain pressure is cited by 95 per cent of executives, which is an increase from 69 per cent in 2024. The desire to be closer to customers is cited for the first time, arriving in second position (92 per cent).
Rising tariffs are further exacerbating supply chain challenges, with 93 per cent of executives expressing concerns about their impact. Reindustrialisation is increasingly viewed as a strategic response to the geopolitical environment – notably for battery/energy storage manufacturing, automotive and telecom – with more over of executives across regions stating that tariffs are accelerating their reshoring and reindustrialisation efforts.
The challenges of reindustrialisation are acknowledged with 62 per cent of respondents expecting rising capital costs in the next three years, but half foresee reduced logistics and supply chain costs within the same period thanks to greater proximity to customers. In addition, nearly two-thirds still view the domestic skills gap as a major challenge.
Nearshore and friendshore manufacturing to surge
Over the past year, business leaders across sectors said they have intensified their strategy to relocate their production and supply chain with 56 per cent investing in nearshoring or combined reshoring and nearshoring of their manufacturing, which is up from 42 per cent in 2024.
In the next three years, onshore and nearshore operations are expected to rise to account for 48 per cent (up seven per cent) and 24 per cent (up two per cent) respectively, of total manufacturing capacity.
According to the report, ‘friendshoring’ is poised to become a key route forward for 73 per cent of organisations in terms of sourcing and production. It is expected to account for 41 per cent of total manufacturing capacity in the next three years, up from 37 per cent in 2024. In total, 82 per cent of executives indicate that they plan to reduce supply chain reliance on China, which is an increase from 58 per cent in 2024. Organisations surveyed have instead targeted reindustrialisation destinations in North America, UK, Mexico, Vietnam, India and North Africa.
Advanced technologies to accelerate reindustrialisation
Most organisations (62 per cent) are focusing on upgrading manufacturing facilities to make them smart and tech enabled. Over half of them have realised more than 20 per cent cost savings through digital technologies in their reindustrialisation efforts and 84 per cent plan to invest in advanced manufacturing technologies to further reduce costs.
More than 60 per cent of organisations are looking at technologies including data and analytics and AI/Machine Learning to support reindustrialisation in the next three years. Organisations are also considering emerging technologies such as Gen AI and 5G & Edge computing; blockchain and digital twins; and quantum technologies.
In addition, 73 per cent of organisations foresee that reindustrialisation will help catalyse a shift toward sustainable and eco-friendly manufacturing practices, an increase from 56 per cent in 2024.
The full report can be found here.
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