Capgemini: UK Supply Chain Investment Up Amid Trade Tensions
Companies across the UK are stepping up their efforts to restructure supply chains, moving production closer to home and strengthening relationships with trusted partners.
Capgemini’s latest report highlights a sharp rise in investment and strategic shifts towards nearshoring and friendshoring, as businesses navigate growing trade tensions and supply chain disruptions.
Supply chains are under intense pressure, with nearly all UK executives (97%) identifying resilience as a top priority. Geopolitical instability (94%) and the need to be closer to customers (96%) are also driving this shift. Compared to 2024, when only 68% of UK executives prioritised resilience, the urgency has soared.
Investment in reindustrialisation is expected to reach US$650bn by 2028, a sharp increase from the US$430bn projected in 2024. This reflects a broader global trend, with total investments in domestic and international manufacturing projected to rise from US$3.4tn in 2024 to US$4.7tn in the next three years.
Nearshoring – relocating manufacturing closer to domestic markets – is gaining momentum, with 28% of UK firms investing in it in 2025, more than double the 13% recorded in 2024. However, the US is moving even faster, with 37% of firms opting for nearshoring this year.
Friendshoring (establishing supply chain partnerships with allied nations) is another major trend. A strong majority (74%) of UK executives expect friendshoring to be crucial, with projections that it will account for 38% of total manufacturing capacity in the next three years.
Tariffs and trade disputes accelerate change
Rising tariffs are playing a major role in reshaping supply chain strategies. Almost half (48%) of UK executives say tariffs are pushing their companies towards reindustrialisation, though this figure is even higher in the US, where 59% of executives report the same.
The reindustrialisation trend is particularly pronounced in industries such as battery production, energy storage, automotive manufacturing and telecoms. Executives in these sectors view reshoring and friendshoring as necessary responses to shifting trade policies.
Despite the urgency, executives acknowledge the financial and logistical challenges involved. More than three in five (62%) expect capital costs to rise over the next three years.
However, half also anticipate reduced logistics and supply chain costs as production moves closer to end markets. The skills gap remains a concern, with nearly two-thirds of firms struggling to find the necessary expertise domestically.
Technology and sustainability drive reindustrialisation
Advanced manufacturing technologies are playing a key role in these shifts. Six in ten companies (62%) are upgrading factories to make them more efficient and digitally connected.
More than half have already seen cost savings of at least 20% from adopting digital manufacturing technologies.
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 tools, while newer technologies such as generative AI, 5G, blockchain and quantum computing are also being explored. These innovations are expected to enhance efficiency, reduce costs and improve supply chain transparency.
Reindustrialisation is also accelerating sustainability efforts. Nearly three-quarters (73%) of executives expect their strategies to support greener manufacturing practices, up from 56% in 2024. This shift aligns with broader industry goals to reduce environmental impact while strengthening supply chains.
The future of manufacturing is increasingly regionalised, digitised and focused on long-term stability rather than short-term cost savings.
As businesses navigate economic uncertainty and shifting global trade dynamics, many are choosing to invest in resilience now to secure a more stable future.
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