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: reindustrialisation strategies in Europe and the US', 47% of large European and US organisations have already invested in reshoring their manufacturing production and 72% are currently developing a strategy for reindustrialisation or already have one in place. A majority of business leaders believe reindustrialisation will help their organisations meet climate goals with an expected carbon reduction of 13.6% on average in the next three years.
Photo: Dreamstime.com
Investments in 'reshoring', 'nearshoring', 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'.
"This research highlights the magnitude of the mobilisation and investments from business leaders to reindustrialise 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 organisations will need to adjust to."
Half of the survey participants anticipate that reindustrialisation will drive job growth domestically across various sectors. However, meeting this demand will require a skilled manufacturing workforce, as acknowledged by 72% of organisations. The share of the manufacturing workforce with advanced digital skills, including proficiency in areas such as supply chain management, data analytics, and artificial intelligence/machine learning, is projected to rise from 31% today to 53% in the next three years.
More information:
Capgemini Research Institute
www.capgemini.com