Reindustrialisation prioritised over short-term profitability, says research
‘Friendshoring’ set to become the new normal – and it’s more sustainable
Research from Capgemini reveals that large organisations across the US and Europe are reconfiguring global supply chains in a bid to get ahead of supply chain vulnerabilities and geopolitical risks.
According to the the report, entitled "The resurgence of manufacturing: Reindustrialization strategies in Europe and the US - 2025 large organisations in Europe and the US are reconfiguring supply chains and reindustrialising as they move to mitigate concerns over supply chain pressures, rising tariffs and trade disputes.
The reconfiguration of global supply chains and manufacturing capacity, which includes reshoring and nearshoring production, as well as diversification, is being strategically prioritised over short-term profitability.
Nearly 60% of executives are determined to continue their efforts despite higher costs and most organisations (65%) are reducing reliance on Chinese products. Instead, they are planning to invest in what Capgemini calls ‘friendshoring’ – the strategic relocation of supply chains to allies - over the next three years to de-risk their supply chains .
Of course, how any country decides who its friends are right now is a question for the ages.
According to the survey which gathered insights from 1,400 senior executives this January, market tensions are driving large European and US organizations to accelerate their plans to diversify their manufacturing and supply chains. Two thirds have an active or in-progress reindustrialisation strategy.
Businesses are prepared to invest $4.7 trillion over the next three years in reindustrialisation efforts, up from $3.4 trillion in 2024.
Rising tariffs and supply chain strain
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 an overwhelming majority (95%) of executives, a significant increase from 69% in 2024. A close second to this concern, is the desire to be closer to customers which is cited for the first time.
Donald Trump loves a tariff but businesses don’t seem to share his enthusiasm. 93% of executives expressed concerns about the impact of tariffs. That number might well have been higher had the question been asked post “Liberation Day.”
Executives also acknowledge the complexity and cost of reindustrialisation. More than six in ten (62%) expect 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.
UK firms are very much on board with this strategy. UK organisations are set to invest $650 billion in reindustrialisation by 2028, a sharp rise from $430 billion projected in 2024. A growing number of businesses are also moving production closer to home, with 28% of UK companies having invested in nearshoring in 2025, more than double the 13% recorded the previous year.
More sustainable supply chains
A positive by-product of shorter and less complex supply chains is that the latter tends to be a more sustainable model. Nearly three quarters (73%) of the executives who took part in the research agreed that reindustrialisation would catalyze a shift toward more sustainable manufacturing practices. Half of these went as far as to say that achieving their climate goals hinged on the success of their reindustrialisation efforts.
Mike Dwyer, Head of Intelligent Industry, Capgemini commented:
"This new prioritisation of reindustrialisation presents a transformative opportunity, not only for businesses to enhance operational resilience, but also to drive sustainability and foster transparency within global supply chains. Our research indicates that large organisations across Europe and the US are shifting their investments towards sustainable manufacturing practices, with 73% expecting this shift to catalyse eco-friendly initiatives within three years. This move is essential in encouraging companies to prioritise long-term operational strategies over immediate profitability, particularly amidst rising tariffs and geopolitical tensions.
“The projected £4.7 trillion investment in diversifying manufacturing not only reflects a response to supply chain pressures but also underscores a collective commitment to environmental accountability. By embracing friendshoring and nearshoring strategies, businesses can reinforce proximity to ethical supply sources, driving transparency and ensuring that sustainability becomes a foundational principle rather than an afterthought. Furthermore, investments in advanced technologies are pivotal in achieving these goals, allowing organisations to innovate while simultaneously reducing their carbon footprint.
“It is clear that the path forward is not just about navigating challenges but leveraging them to create a more sustainable and transparent industrial landscape for the future.“