Resurgence of Manufacturing Powering Reindustrialisation

Reindustrialisation has an Impact on Energy and Sustainability Goals. Credit: Johannes Plenio
A US$3.4tn investment for the US and Europe over the next three years to reindustrialise can accelerate the drive toward sustainability, Capgemini says

Capgemini’s latest research shows that some of the world’s biggest companies — based and operating in and around the US and Europe — are reevaluating their supply chains and streamlining their operations to bring them closer to domestic markets.

Almost half of these companies, Capgemini says, have already begun this process, with more planning on hopping on the trend in the next few years.

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The study surveyed 1,300 executives from organisations with more than US$1bn in annual revenue across the US, UK and Europe that operate across 13 key industrial and manufacturing industries.

But what does this mean for wider energy and sustainability goals? The hope is that this migration will reduce the amount of carbon emissions their factories produce by around 14% over the next three years.

The resurgence of manufacturing: Reindustrialisation strategies in Europe and the US by Capgemini

Capgemini’s research concludes 72% of large European and US organisations are developing a strategy for reindustrialisation, or already have one in place, the majority of which have initiated this in the last 24 months. This comes as the majority of business leaders are firm in the belief that deindustrialisation will help their organisations meet climate goals, with an expected carbon reduction averaging at 13.6% in the next three years.

Roshan Gya, CEO of Capgemini Invent and Member of the Capgemini Group Executive Committee, said: “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.

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.” 

What is driving this reindustrialisation trend?

Capgemini has identified four main drivers of reindustrialisation. They are:

  • Supply chain resilience: This is a leading driver of reindustrialisation for nearly 70% of organisations surveyed
  • Sustainability: More than half of organisations said reindustrialisation will help their organisations meet climate goals, especially in reducing their Scope 3 greenhouse gas emissions
  • Geopolitical tensions: Almost two thirds said domestic manufacturing is strategically significant for ensuring national security and anticipate its importance in strategic sectors such as EVs
  • Legislation and incentives: Just under half of surveyed organisations say government policies and regulations are supportive to their reindustrialisation efforts

‘Reindustrialisation supports climate goals and decarbonisation drives reindustrialisation’

One of the main facts Capgemini highlights is the expectation of a nearly 14% carbon reduction thanks to reindustrialisation efforts. This signals a strategic shift towards more sustainable production methods and technologies, aligning with global climate goals.

It also ushers in a new era of sustainability, as a substantial portion of these investments are earmarked for technologies aimed at enhancing sustainability within reindustrialisation initiatives. Here, renewable energy plays a key role as it powers this resurgence with sustainability at its core. 

Thanks to the increasing adoption of renewable energy technologies — like solar and wind — manufacturing facilities can significantly reduce their carbon footprint while ensuring a stable and resilient energy supply.

All the above requires a skilled workforce, one of the main challenges facing the issue of reindustrialisation. Despite this, it also offers significant opportunities for innovation and economic growth, something that will help keep the momentum of this movement going.

It’s safe to say that there is a growing awareness and commitment among some of the world’s largest organisations to incorporate energy-efficient and sustainable practices as they reindustrialise, aligning with climate goals and reflecting a broader recognition of the importance of responsible energy usage in the manufacturing sector.

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