UK firms to invest USD $650 billion in reindustrialisation

Capgemini has released findings from its latest global research on reindustrialisation, revealing shifts in manufacturing investments among large organisations due to trade tensions and supply chain challenges.

The study, which surveyed 1,400 senior executives, indicates a substantial shift towards reindustrialisation among UK organisations. Within the next three years, they are prepared to invest USD $650 billion, a notable increase from the previously projected USD $430 billion in 2024, primarily driven by rising tariffs and supply chain pressures.

According to the research, there is a marked increase in the adoption of nearshoring and friendshoring initiatives. In 2025, 28% of UK businesses have invested in nearshoring their manufacturing, compared to 13% in 2024. However, this figure is lower than in the US, where 37% have already moved in this direction. Additionally, 74% of executives expect friendshoring to play a significant role, projecting it to account for 38% of total manufacturing capacity in the coming three years.

The report states that the primary drivers for reindustrialisation in the UK in 2025 include supply chain resilience (97%), geopolitical concerns (94%), and proximity to customers (96%). These figures represent a significant increase from the previous year when supply chain resilience stood at 68%, and geopolitical concerns at 57%.

The impact of tariffs is also underscored, with 48% of UK executives perceiving tariffs as a catalyst for speeding up their reindustrialisation efforts. In comparison, 59% of US executives share the same view.

Aiman Ezzat, Chief Executive Officer at Capgemini, articulated the importance of these changes saying, "After decades of globalization, the imperative to reindustrialize is clear. Organizations are intensifying their efforts to de-risk and diversify their manufacturing and supply chains through friendshoring to reinforce proximity to markets." He also noted the challenges involved, adding, "Complexities and costs involved in re-orchestrating supply chains are not being underestimated. Business leaders are investing to navigate the unpredictable macro-environment and drive long-term competitiveness, taking advantage of advanced technologies. In an evolving global landscape, regional collaboration with suppliers, technology providers and policymakers will be key to build a resilient and adaptable manufacturing ecosystem."

The study highlights that a vast majority (95%) of executives consider supply chain pressure as a critical factor, an increase from 69% the previous year. Rising tariffs are seen as a major challenge, with 93% of executives expressing related concerns. More than half of the executives across regions view reindustrialisation, particularly reshoring, as a strategic response to the geopolitical environment affecting industries like battery/energy storage, automotive, and telecom.

Cost and complexity concerns regarding reindustrialisation persist, with over 60% of executives anticipating rising capital costs in the next three years. Nonetheless, half foresee a reduction in logistics and supply chain costs due to increased proximity to customers.

In the next three years, manufacturing through nearshore and onshore operations is expected to increase to around 48% and 24% of total manufacturing capacity, respectively. Reports from over half of the business leaders suggest that plans for 'friendshoring' will expand, with expectations for it to comprise 41% of total manufacturing capacity.

During the survey, 82% of executives indicated plans to reduce reliance on Chinese products, favouring North America, the UK, Mexico, Vietnam, India, and North Africa as alternative reindustrialisation destinations.

Advanced technologies are at the forefront for many organisations, with 62% upgrading to smarter, tech-enabled manufacturing facilities. Over 50% reported significant cost savings through digital technologies, and a vast majority plan to further invest in advanced manufacturing technologies over the next three years.

Beyond financial considerations, nearly three-quarters of the organisations foresee a transition towards sustainable manufacturing practices, marking an increase from the previous year. This underscores a broader commitment to sustainability alongside the ongoing reindustrialisation efforts.