Capgemini Report Highlights Rise in UK Nearshoring

Manufacturers across the UK are overhauling their supply chains, bringing production closer to home and forging stronger ties with reliable suppliers.

A recent report from Capgemini reveals a significant increase in investment and strategic shifts towards nearshoring and friendshoring. As trade tensions rise and supply chain disruptions persist, businesses are focusing on securing more stable, cost-effective production networks to safeguard operations and maintain competitiveness.

Supply chains are under mounting pressure, with nearly all UK executives (97%) now considering resilience a top priority. Concerns over geopolitical instability (94%) and the need to be closer to customers (96%) are accelerating this shift. Compared to 2024, when just 68% of UK executives focused on resilience, the urgency has surged.

Investment in reindustrialisation is set to reach US$650bn by 2028, up from the US$430bn forecast in 2024. This reflects a wider global trend, with total investment in domestic and international manufacturing expected to rise from US$3.4tn in 2024 to US$4.7tn within three years.

Nearshoring—the relocation of production closer to home—is gaining traction. In 2025, 28% of UK firms are investing in nearshoring, more than double the 13% recorded in 2024. However, the US is moving even faster, with 37% of firms adopting this strategy.

Friendshoring, which strengthens supply chain ties with allied nations, is also becoming a key focus. A significant 74% of UK executives believe it will be essential, with estimates suggesting it will account for 38% of total manufacturing capacity by 2028.

Trade policies reshape manufacturing strategies

Rising tariffs are forcing manufacturers to rethink supply chains, with 48% of UK executives saying trade barriers are driving reindustrialisation. The impact is even greater in the US, where 59% of executives report the same trend.

Industries such as battery production, energy storage, automotive manufacturing and telecoms are feeling the pressure most. For these sectors, reshoring and friendshoring are becoming essential responses to evolving trade policies.

Despite the urgency, financial and logistical challenges remain. More than 62% of executives expect capital costs to rise over the next three years. However, half believe bringing production closer to end markets will reduce logistics and supply chain costs. A lack of skilled workers is another hurdle, with nearly two-thirds of firms struggling to find the expertise needed for advanced manufacturing.

Technology & sustainability driving reindustrialisation

Manufacturers are turning to advanced technology to navigate these changes. Nearly 62% of companies are upgrading factories to improve efficiency and connectivity, helping to offset the cost of relocating production.

The benefits are already clear—more than half of firms that have adopted digital manufacturing technologies report cost savings of at least 20%. As investment in smart factories grows, UK manufacturing is becoming more competitive, resilient and sustainable.

Bill McRaith, former Chief Supply Chain Officer at PVH, sums up the situation: “The model that [the apparel industry] has used for the last 30 years is redundant.

"A solution is to create a ‘supply lattice,’ where some goods continue to be sourced offshore, others are bought from neighbouring countries and a third portion are manufactured close to where they are sold.”

AI, machine learning and data analytics are among the most widely adopted technologies in manufacturing, while emerging innovations such as generative AI, 5G, blockchain and quantum computing are gaining interest. These advancements promise to boost efficiency, lower costs and provide greater visibility across supply chains.

The drive towards reindustrialisation is also accelerating sustainability efforts. Nearly 73% of executives expect their strategies to promote greener manufacturing practices, a sharp rise from 56% in 2024. This shift reflects a growing commitment to reducing environmental impact while building more resilient supply chains.

The future of manufacturing is becoming increasingly regionalised, digitally advanced and focused on long-term security rather than short-term cost-cutting. As businesses adapt to economic uncertainty and evolving global trade conditions, many are prioritising investment in resilience now to ensure greater stability in the years ahead.

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