Capgemini: Resilience, Reindustrialisation & Reshoring

Reindustrialisation has entered the mainstream, but planned investments are declining. 

A report from Capgemini found that nearly three-quarters of large organisations now have a reindustrialisation strategy, compared with less than 60% two years ago.

However, planned reindustrialisation investments are declining from US$4.7tn in 2025 to nearly US$2.5tn in 2026 over the next three years, except in a small number of strategic sectors.

In the US, reshoring investment grew from 30% to 48% in just one year. Europe looks to be prioritising friendshoring instead, with 64% of organisations pursuing allied locations outside of the region. 

Pierre Bagnon is Global Head of the Intelligent Industry Accelerator at Capgemini, with more than two decades of experience. 

He helps businesses to gain a competitive edge using digital technologies and tackle industrial challenges.

Pierre answers Manufacturing Digital's questions about reindustrialisation in this Q&A. 

Why do you think reindustrialisation investments are declining?

The headline figure for declining planned investments needs to be interpreted carefully. Our research shows not a loss of intent, but a change in behaviour. 

Three-quarters of organisations have now put in place a reindustrialisation strategy or are developing a plan. This is a significant number that has continued to increase year-on-year. As manufacturers are maturing their strategies, they become more selective: capital-intensive programmes are being delayed and technology-driven investments are prioritised.

There are a few reasons for this. Geopolitical and policy uncertainty is a major one, with eight in ten organisations citing it as a challenge, according to our research. At the same time, the economic environment remains constrained, and energy price volatility, particularly in Europe, is prompting companies to reassess the viability of large-scale domestic production.

Importantly, our study also shows that sovereignty has become a primary strategic driver. Around 72% of organisations say they are seeking greater control over production capabilities, raw materials, components and critical technologies. This does not mean investing more at any cost; it means investing more deliberately, with resilience and strategic control outweighing sheer scale.

How can resilience be measured?

Resilience has moved from being a vague concept to a measurable operational and economic parameter. At its core, resilience is about how an operating model performs under stress.

Today, organisations are quantifying resilience through advanced simulations and scenario modelling. They are assessing exposure to multiple points of failure – suppliers, geographies, logistics routes, energy availability, tariffs or access to critical raw materials – and analysing how these risks interact.

What is new is that resilience and value creation are now inseparable. Almost seven in ten organisations say improved supply-chain resilience is a key justification for reindustrialisation investments, while 86% prioritise long-term strategic benefits, such as market access and protection against disruption, over short-term cost optimisation

Everyone talks about leaving China, so why are 64% of companies still investing there?

The idea that companies are “leaving China” is too simplistic and does not reflect what is actually happening on the ground. What we see instead is pragmatic rebalancing.

There are several reasons for organisations wanting to maintain or increase their investments in China. It offers unmatched industrial scale, strong cost competitiveness and increasingly advanced manufacturing and automation capabilities. Further, China controls a significant portion of rare-earth mining and refining capabilities required for EV motors, wind turbines, industrial equipment, robotics or defence systems.

So, in sectors like electronics and automotive, the ecosystem is difficult to replicate quickly elsewhere. It is also a major end market, so companies need a presence there to stay competitive regionally. In automotive, and especially electric vehicles and batteries, China is no longer just a low-cost manufacturing base – it is a global industrial and technology leader. Players like CATL and BYD lead the global EV battery supply, serving not only Chinese OEMs but also European and US manufacturers. 

With that said, many organisations do have a diversification strategy. They are intending to reduce dependency on China notably for US or European-facing supply chains.

Could AI offset the high costs of reshoring manufacturing? How?

An interesting finding from our study this year is that AI is viewed as the most important way to address the cost gap between regions in reindustrialisation programmes. That is why 87% of organisations see AI, automation and technologies as the main lever to support their reindustrialisation efforts. This an important increase, particularly considering that 8 companies out of 10 say skills shortages are a major constraint, particularly in advanced manufacturing and digital roles. 

AI delivers value across multiple dimensions. Productivity improves in production through advanced planning, maintenance and quality, via automated inspection and root cause analysis, enabling more efficient use of materials and energy. For greenfield factories, this is a fundamental shift to create full digital twins and simulate production before commissioning, accelerating and derisking technology transfers. Going one step further than automated factories, it enables manufacturers to create autonomous factories.

Are massive, company-owned factories becoming a thing of the past?

In some industries, the traditional model of large and single-purpose factories will become less dominant. In its place, we are seeing the rise of more flexible, networked production models.

New investments are going into smaller technology-enabled facilities, which are more automated and more modular. We also see an increasing number of concepts and projects fully automated towards “lights-out” factories that operate with minimal human intervention.

Simultaneously, companies are decoupling access to manufacturing from ownership, sharing manufacturing assets, using third-party manufacturers and designing facilities that can produce multiple product lines, as they become more concerned with flexibility, speed and capital efficiency. 

That said, in many industries, manufacturers must keep their industrial knowledge. This is a critical competitive advantage as they increasingly invest in process innovation and will therefore continue to own strategic industrial assets.