According to research, large organisations in Europe and the US have intensified their focus on industrialisation to reduce concerns about supply chain pressures as well as rising tariffs and trading disputes.
Capgemini Research Institute’s report found that 2/3 of senior executives surveyed in organisations with revenue over $1bn had an active reindustrialisation plan – up from 59% by 2024.
Reindustrialisation can include onshoring, or “reshoring”, production to the home market. “Nearshoring” is to a neighboring country. “Friendshoring” means locating manufacturing to countries that are “geopolitical allies and mercantile partners”.
The majority (86%) of organisations believe, however, that reindustrialisation requires a highly-skilled industrial workforce. This is up from 72% back in 2024. Two-thirds of organisations (65%) continue to see domestic skills shortages as a significant challenge. This is a slight improvement over 64% in the year 2024.
A senior executive in the supply chain of an aerospace company emphasized the need for digital skills to manage smart, tech-enabled production facilities. “Without qualified people to run and optimize these systems the investment will stall.” Training and upskilling are therefore essential to digital transformation.
The report revealed that 87% of organizations anticipated significant labour shortages due to the ageing workforce. 74% also cited restrictive immigration policies.
Aiman Aiman Ezzat is the chief executive officer of Capgemini. “After decades, globalisation has made it imperative to reindustrialise. Through friendshoring, organisations are increasing their efforts to diversify and de-risk their supply and manufacturing chains to strengthen proximity to markets.
“The complexity and costs of re-orchestrating supply chains should not be underestimated. Business leaders invest to navigate an unpredictable macro-environment, and drive long-term competition by taking advantage of advanced technology. “In an ever-changing global landscape, regional cooperation with suppliers, policymakers, and technology providers will be crucial to building a resilient, adaptable manufacturing eco-system.”
Reindustrialisation is driven by supply chain resilience, geopolitical issues, and the desire to be close to customers. The supply chain was cited as a major concern by 95% executives. This is a substantial increase from the 69% of executives in 2024. For the first time in the survey, executives cited a desire to be more close to their customers as the second most significant driver.
Business leaders from all sectors have said that they have increased their efforts to relocate production and their supply chain. 56% of them now invest in “reshoring or closeshoring” their manufacturing. This is up from only 42% in 2024.
The trend is expected to continue. The onshore and offshore operations will account for 48 % (up 7 percentage point) and 24 % (up 2pp), respectively, of the total manufacturing capacity in the next three-year period.
In the survey, it was found that UK large businesses have spent $440 billion on reshoring or nearshoring operations since 2022. Almost two thirds (59%) of UK businesses plan to upgrade or expand manufacturing in the UK and other nearby countries by 2028.
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