Large European and US organizations are planning to invest $3.4 trillion over the next three years for reindustrialization

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Large European and US organizations are planning to invest $3.4 trillion over the next three years for reindustrialization

• Domestic markets are projected to represent half of total production capacity in the next three years, with offshore declining to 17% (versus 35% in 2021)
• Only half of business leaders think government policies and regulations are supportive of reindustrialization efforts
• Organizations are expecting a carbon reduction of nearly 14% on average through reindustrialization
  
  

Paris, April 18, 2024 –The reconfiguration of global supply chains and manufacturing capacity, with the aim of bringing them closer to, or within, domestic markets, has gained momentum in Europe and the US. According to the Capgemini Research Institute’s latest report, “The resurgence of manufacturing: reindustrialization strategies in Europe and the US,” 47% of large European and US organizations have already invested in reshoring their manufacturing production and 72% are currently developing a strategy for reindustrialization or already have one in place. The majority having initiated these strategies within the past two years. A majority of business leaders believe reindustrialization will help their organizations meet climate goals with an expected carbon reduction of 13.6% on average in the next three years.

Investments in “reshoring,” “nearshoring,”¹ and domestic manufacturing, as well as the construction or upgrade of manufacturing facilities, are on the rise in Europe and the US to enhance resilience against disruptions. The majority of this funding is directed towards domestic market initiatives, comprising 54% of cumulative investment in the last three years. But hurdles such as skill shortages, scarcity of raw materials, and lack of incentives will likely lead to an increase in short-term investments outside the domestic market, mainly through nearshoring and “friendshoring.”²

“This research highlights the magnitude of the mobilization and investments from business leaders to reindustrialize Europe and the US. Domestic manufacturing and nearshoring are becoming instrumental to mitigate multifaceted risks prevalent in Western countries and the imperative to bolster economic sovereignty and security,” said Roshan Gya, CEO of Capgemini Invent and Member of the Capgemini Group Executive Committee. “Business leaders are accelerating strategic initiatives to fortify supply chain resilience and flexibility, re-establish national security in strategic sectors, reach climate targets, and regain the industrial powerhouses of Europe and North America once enjoyed. This is a structural shift that organizations will need to adjust to.”