1、#GetTheFutureYouWantThe resurgence of manufacturingReindustrialization strategies in Europe and the USExecutive Summary In recent times,Europe and the US have been significantly affected by unprecedented domestic and external disruption,from the global pandemic and geopolitical upheaval to sea chang

2、es in government regulation and game-changing technological advancements.The concept of“reindustrialization,”which we define as the reconfiguration of global supply chains and manufacturing capacity,often with the aim of bringing them closer to or even within domestic markets,has gained momentum in

3、the international business dialogue.Driving this is the imperative to promote supply chain resilience and flexibility;increase both the availability and appeal of skilled manufacturing jobs;meet climate targets;re-establish national security in strategic sectors,and regain the manufacturing might th

4、at the industrial powerhouses of Europe and North America once enjoyed.Within the past couple of years,most large organizations in our survey have begun to formulate strategies to revitalize their industrial sectors proactively calling for action from governments.The rapidity with which reindustrial

5、ization has taken hold is remarkable.Our research reveals that total reindustrialization investment by European and US organizations is projected to reach$3.4 trillion over the next three years.Among the organizations in our survey,this represents an average allocation of 8.7%of revenue.2Capgemini R

6、esearch Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USExecutive Summary Organizations recognize the imperative to reindustrialize Seven in 10 organizations identify supply chain resilience defined as the ability to adapt and respond quickly to opera

7、tional disruptions as a leading driver of reindustrialization Most organizations are active in reindustrialization.Seventy-two percent are currently developing a strategy for reindustrialization or already have one in place.The majority of organizations have initiated these strategies post-pandemic(

8、i.e.,within the past two years).Organizations anticipate that their reindustrialization endeavors will bring both competitive advantage and sustainability gains.In the next three years,organizations expect,on average,a reduction of around 14%in their carbon emissions,and improvement of around 13%in

9、customer satisfaction rates.The rise of domestic manufacturing and onshoring A majority(63%)of organizations recognize the importance of establishing a domestic manufacturing infrastructure to ensure national security,and a similar percentage(62%)acknowledge its significance for strengthening strate

10、gic sectors/industries(e.g.,electric vehicles(EVs);medicines and vaccines;and semiconductors).Nearly half(47%)of organizations have already invested in reshoring their manufacturing/production.Consequently,on average,onshore will represent 49%of total production capacity in the next three years,up f

11、rom 45%today;offshore will decline from 26%to 17%in the next three years.3Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USExecutive Summary Reindustrialization supports climate goals and decarbonization drives reindustrialization A

12、majority(55%)of executives are optimistic that reindustrialization will help their organizations meet climate goals,especially in reducing their Scope 3 greenhouse gas(GHG)emissions,and 56%believe reindustrialization will drive a shift towards sustainable manufacturing.The rise of gigafactories is a

13、 key element in the journey towards sustainability over half(54%)of automotive,battery,and energy executives in our survey say their organization is currently building a gigafactory or has plans to do so within the next five years.Beyond environmental sustainability,enhancing medicine and vaccine su

14、pply and manufacturing capacities promotes social sustainability and health security.Digital technologies are a critical enabler for reindustrialization Our research reveals a prevailing optimism among executives,with 68%confident that reindustrialization can drive innovation and technical advanceme

15、nt.Most organizations focus principally on the modernization of existing manufacturing facilities:among those deploying a brownfield strategy,28%have begun an upgrade in the past year.In their reindustrialization efforts,organizations will rely extensively on technologies such as artificial intellig

16、ence(AI),machine learning(ML),automation,and data analytics.Use of emerging technologies such as 5G/edge,generative AI,and digital twin are poised for a substantial upswing in the coming three years.Organizations are investing in technologies to enhance sustainability within their reindustrializatio

17、n initiatives,with 59%believing the success of their reindustrialization hinges on both enhanced digitalization and sustainability within their industries.4Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USExecutive Summary Reindustri

18、alization requires a highly skilled workforce Around half(53%)of executives expect reindustrialization to increase the number of manufacturing jobs,boosting employment.A majority(72%)of executives say that reindustrialization will create demand for a more skilled manufacturing workforce.Given an agi

19、ng manufacturing workforce,nearly half of organizations(48%)recognize the need to engage the younger generation to make meaningful contributions to reindustrialization.Most(64%)executives believe the drive to reindustrialize will involve adjusting their skills mix,with the proportion of the manufact

20、uring workforce with advanced digital skills projected to rise from 31%today to 53%in the next three years.About half(51%)of executives agree that they must upskill their current workforce.To take full advantage of reindustrialization and accelerate their journeys,organizations will need to formulat

21、e and execute at speed a clear and effective strategy encompassing the geopolitical situation,embed sustainability into its strategic approach and deployment,invest in attracting new talent and upskilling their manufacturing workforce,integrate advanced technologies into manufacturing and production

22、,and foster regional and global partnerships to enhance domestic capabilities and serve new value chains.Business leaders must also proactively engage with policymakers and regulators to anticipate and react quickly to legislation and incentives to take advantage of opportunities in the fast-paced r

23、eindustrialization race.5Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USWho should read this report and why?This report offers in-depth insight into the factors driving reindustrialization in Europe and the US,including government

24、legislation,regulation,and policy.It assesses the motivation for significant organizations to invest in reindustrialization initiatives.We also gauge the extent of their investment in reshoring,nearshoring,and domestic manufacturing and examines the link between sustainability and reindustrializatio

25、n and the combined effect on the workforce.Digital and technology leaders across manufacturing,operations,supply chain,procurement,and R&D/innovation will find this report valuable,as will corporate leaders in sustainability,human resources,and finance.It will also be of interest to chief executives

26、 and European and US policymakers who want a holistic view of this highly relevant topic.This report draws on original findings from an extensive industry survey of 1,300 senior executives(director level and above)from organizations with annual revenue above$1 billion.Organizations are headquartered

27、 in France,Germany,Italy,the Netherlands,the Nordics(i.e.,Denmark,Finland,Norway,Sweden),Spain,the UK,and the US.Please see the research methodology at the end of the report for more details.6Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe an

28、d the USReindustrialization refers to a country or group of countries strategic effort to revive and strengthen its industrial sector.Its principal aims are to create jobs,boost production,and reduce dependency on external sources.In this research,we define“reindustrialization”as the reconfiguration

29、 of global supply chains and manufacturing capacity,including reshoring,and nearshoring production,as well as diversifying and investing in domestic manufacturing/production.This could involve building new factories;What is reindustrialization?upgrading or modernizing existing factories by installin

30、g new technologies;building gigafactories(i.e.,typically large-scale battery manufacturing),independently or as a joint venture;and/or onshoring supply chains.Specifically,in this research,reshoring is defined as bringing manufacturing/production back to the domestic market/country of headquarters.N

31、earshoring is defined as moving manufacturing/production to a nearby or neighboring country.7Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USIntroductionEurope and the US have undergone a significant decline in manufacturing employm

32、ent.Despite being a leading driver of employment growth for decades,manufacturing in the US has declined over the past half-century as the economy has shifted to service industries.US manufacturing employment peaked in 1979 at 19.6 million,falling to 12.9 million in 2023.1 Over the past quarter-cent

33、ury,Europe has followed suit:in 2001,manufacturing employment in Europe approached 27 million;by 2022,it had declined to under 24 million.2 The contribution of manufacturing to European GDP decreased from 18%in 2000 to 15%in 2022.3 A combination of factors has driven the decline,from globalization a

34、nd offshoring to an aging workforce and the skills gap arising from the demands of operating new technologies.Against this backdrop,recent economic and geopolitical shocks have exposed the fragility of global supply chains.Organizations in Europe and the US are recognizing the importance of reindust

35、rialization for economic resilience,job creation,health security,technological advancement,and innovation.By revitalizing industrial sectors and shortening supply chains,organizations can promote sustainable growth.At the same time,they must modernize existing manufacturing facilities and incorporat

36、e smart and advanced manufacturing technologies in order to boost domestic manufacturing.This research explores the factors driving the reindustrialization of Europe and the US,and the motivation and strategic planning of large organizations to reconfigure global supply chains and manufacturing capa

37、city.It gauges the extent of investment in reshoring,nearshoring,and domestic manufacturing,as well as whether organizations are upgrading existing manufacturing facilities or building new ones.It also examines the link between sustainability and reindustrialization and the combined effect on the wo

38、rkforce.To address these themes,we conducted a global survey of 1,300 executives at organizations with annual revenue above$1 billion.Organizations are headquartered in 11 countries:France,Germany,Italy,the Netherlands,Denmark,Finland,Norway,Sweden,Spain,the UK,and the US.Organizations surveyed oper

39、ate across 13 key industries:aerospace and defense,automotive,battery manufacturing/energy storage,8Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USIntroductionchemicals,consumer products manufacturing,energy,electronics,industrial

40、machinery and equipment,metals and mining,life sciences,transportation,utilities,and telecom.We also interviewed supply chain and manufacturing executives.For more details on the survey sample,please refer to the research methodology.This report comprises six sections:Organizations recognize the imp

41、erative of reindustrialization 1The rise of domestic manufacturing and onshoring 2Reindustrialization supports climate goals and decarbonization drives reindustrialization3Digital technologies are a critical enabler of reindustrialization4Reindustrialization requires a highly skilled workforce5How t

42、o accelerate reindustrialization 69Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USOrganizations recognize the imperative of reindustrialization0110Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization

43、 strategies in Europe and the USReindustrialization is at the center of business discourse today Reindustrialization is seen as a multifaceted process to tackle various economic,security,technological,environmental,and political challenges prevalent in Europe and the US today.Our research highlights

44、 enhancing supply chain resilience as the primary driver of reindustrialization(see Figure 1).Additional noteworthy drivers of this strategic shift include climate concerns,escalating geopolitical tensions,and the imperative to bolster national security.Below,we explain the multiple factors driving

45、reindustrialization as a topic of business dialogue:Supply chain resilience:The COVID-19 pandemic exposed the vulnerabilities of global supply chains,motivating many organizations to rethink production and sourcing strategies.In addition,disruptions in key geographies continue to contribute to sourc

46、ing and logistical uncertainties,blocking the movement of goods.Organizations view reindustrialization as a means to bolster supply chain resilience,ensuring its stability and agility while managing the associated Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024

47、,N=1,300 executives.FIGURE 1.Nearly seven in 10 organizations identify supply chain resilience as a leading driver of reindustrialization%of organizations stating the below is a top driver of their reindustrialization strategy and initiativesDesire to reduce logistical/supply chain costsDesire to re

48、duce labor costsGovernment policies,regulations,and lawsDesire to re-capture economic valueand increase competitivenessGeopolitical tension and national securityClimate change/sustainabilityconcerns with long supply chainsSupply chain pressure and reliability69%59%56%51%50%50%60%11Capgemini Research

49、 Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the UScosts.The US Inflation Reduction Act(IRA)generates opportunities to develop projects,grow the workforce,and establish domestic manufacturing lines.4 An executive from a high tech company in France says:

50、“A critical part of reindustrialization is bringing manufacturing and production closer to the end market.This means manufacturing the product where you have the most customers.This will reduce fluctuations while improving resilience and sustainability in the supply chain.”Sustainability considerati

51、ons of long supply chains:In addition to increased vulnerability to external disruptions,long supply chains involve increased carbon emissions and resource depletion.Our previous research on biodiversity revealed that supply chain disruptions can occur as a result of biodiversity loss,resulting in r

52、esource scarcity,high or volatile prices for raw materials,and increased production costs.5 In response,organizations are re-evaluating and shortening supply chains and establishing domestic manufacturing facilities to mitigate biodiversity loss;improve supply chain resilience;and reduce transportat

53、ion-related and other indirect carbon emissions,especially Scope 3.The International Energy Agency(IEA)estimates that two-thirds of global battery-cell production takes place in China,while the US accounts for around 10%.6 As of November 2023,driven by the IRA,there has been$173 billion in investmen

54、t in electric vehicle and battery manufacturing announced in the US(including investment from private companies and federal support).7 Geopolitical concerns:Escalating geopolitical tensions such as US-China tensions,the war in Ukraine,and the European energy crisis have emphasized the risks of remot

55、e production.Across earnings calls and corporate filings,chief executives of S&P 500 companies referred to the word“geopolitics”12,000 times in 2023,three times as much as they did in 2021.8 The impact is moving towards rethinking globalization as countries seek to de-risk.The need to ensure the sec

56、urity of supply domestically or with like-minded nations is a compelling driver of onshoring and nearshoring.Economic concerns:Deindustrialization has led to job losses and damaged competitiveness,particularly in regions that,historically,were considered industrial hubs.These regions are responding

57、with reindustrialization as a strategy to reclaim economic value and fortify competitiveness.Frances green industry bill introduced in 2023,for example,focuses on reindustrialization to boost economic value and competitiveness.The bill includes 69%of organizations state supply chain pressure and rel

58、iability is a top driver for reindustrialization12Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US Government legislation and incentives:Government legislation and incentives have catalyzed the implementation of strategic frameworks

59、 and initiatives conducive to industrial growth and innovation.These policies often incorporate incentives for domestic production,streamlined regulatory processes,and targeted industrial investments,particularly in areas of national strategic importance,such as semiconductors,batteries,renewable en

60、ergy,defense,and pharmaceuticals.The European Chips Act(ECA)11 and the US CHIPS and Science Act12 encourage localized semiconductor production.Technological advances:The rise of automation,AI,and advanced manufacturing techniques such as additive manufacturing and robotics supports reindustrializati

61、on by enhancing productivity while reducing manufacturing costs.In 2022,US consumer goods giant Procter&Gamble(P&G)forged a multi-year partnership with Microsoft to transform its digital manufacturing platform,harnessing the industrial internet of things(IIoT),digital twin,data analytics,and AI.The

62、goal is to bring products to market faster,enhance customer satisfaction,improve productivity,and reduce costs.13 60%of organizations state sustainability concerns is a top driver for reindustrializationA strategy executive from a large European industrial manufacturer elaborates on these key driver

63、s:“Over the past three years,weve faced significant supply chain challenges,exacerbated by increased market demand post-pandemic.Our supply chain resilience was inadequate,leading to a failure to meet customer expectations.This crisis has rendered critical components and key materials inaccessible.I

64、n light of further rises in geopolitical tensions,were revising our reindustrialization strategy,shifting focus from Asia and low-cost countries to the US and Europe.Were prioritizing local manufacturing agility to mitigate environmental and geopolitical risks.”green industry investment in tax credi

65、ts for batteries and renewable energy,with the goal of driving economic growth.9 The goal of the Infrastructure Investment and Jobs Act(2021)in the US,which includes provisions for tax breaks and subsidies across sectors,including EVs and charging infrastructure,is to promote economic growth,create

66、jobs,and imbue the economy with greater resilience.10 13Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USSource:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 2.A majority(72

67、%)of organizations have a reindustrialization strategy or are currently developing their strategiesMost organizations have a reindustrialization strategy or are developing oneMost organizations are active in setting a reindustrialization strategy.Nearly half(48%)say they are developing a strategy fo

68、r reindustrialization and 24%have a comprehensive strategy already in place(see Figure 2).As defined earlier in this research,a reindustrialization strategy might encompass building new factories;upgrading or modernizing existing factories by installing new technologies;building gigafactories(i.e.,t

69、ypically large-scale battery manufacturing);and/or onshoring supply chains.%of organizations with a reindustrialization strategyPlanningto develop astrategyStrategy isin developmentComprehensivestrategy in place28%48%24%72%have a strategy or plan to14Capgemini Research Institute 2024The resurgence o

70、f manufacturing:Reindustrialization strategies in Europe and the USFIGURE 3.Most organizations across industries have recently started/developed a strategy for reindustrializationAcross industries,an average of 62%of organizations began developing their strategies within the past two years(i.e.,post

71、-COVID-19 pandemic;see Figure 3).%of organizations on when they started to develop a reindustrialization strategyIn the last 2 yearsIn the last 2-5 yearsMore than 5 years agoAverageElectronicsAutomotiveIndustrial machinery and equipmentEnergyAerospace and defenseTelecomLife sciencesTransportationUti

72、litiesConsumer products manufacturingMetals and miningChemicals77%18%6%3%67%64%64%62%62%62%61%57%56%56%45%62%30%27%29%30%28%30%35%31%36%38%46%30%8%8%8%10%9%5%12%8%6%9%8%Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=934 executives from organizations that hav

73、e a comprehensive strategy in place or are in the process of developing one.Note:Battery/energy storage manufacturers are excluded from individual industry analysis owing to small sample size;Automotive includes both original equipment manufacturers(OEMs)and suppliers.15Capgemini Research Institute

74、2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USAN EXECUTIVEfrom a high tech company in France“A critical part of reindustrialization is bringing manufacturing and production closer to the end market.This means manufacturing the product where you have the most

75、customers.This will reduce fluctuations while improving resilience and sustainability in the supply chain.”Notably,organizations in industries like electronics,automotive,and energy have started developing their strategy slightly ahead of others.Potential reasons include:The automotive industrys pur

76、suit of sustainability goals,especially in reducing carbon emissions,has accelerated the adoption of electric vehicles(EVs)over the past few years.The onset of the pandemic and increased global demand for remote working coupled with the growth of AI and technological advances in areas like cloud,IoT

77、,5G as well as demand for EVs and other electronic equipment across industries,has spurred aggressive growth in semiconductors over the past 23 years.The investment in renewable energy and clean technologies,supported by regulations like the IRA,likely accelerated an early start to reindustrializati

78、on planning in the energy sector.An operations executive from a global automotive organization in the UK comments:“The past 23 years have highlighted shortcomings in our vertical integration,and weve recognized the risk associated with inadequate supply chains and the availability of essential compo

79、nents at the right place and time.Consequently,we are in the process of reevaluating the composition and structure of our supply chain.”16Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USSource:Capgemini Research Institute,Reindustri

80、alization executive survey,February 2024,N=1,300 executives.FIGURE 4.Organizations expect reindustrialization to bring a reduction in carbon emissions Organizations anticipate their reindustrialization initiatives bringing not only business advantages but also sustainability gains A diverse array of

81、 benefits encompassing both business and operational advantages,as well as a boost to sustainability credentials,are enticing organizations into reindustrialization.In the next three years,organizations expect a reduction of around 14%on average in their carbon emissions,and a nearly 13%average impr

82、ovement in customer satisfaction.There is also an expectation that they will be able to reduce time to market by around 12%and costs by around 11%(see Figure 4).In addition to the projected quantitative benefits,61%of organizations are optimistic about the prospects of reindustrialization providing

83、supply chain resilience in the next three years.%improvements expected from reindustrialization in the next three yearsIncreasedproduction outputIncreasedlabor productivityReducedcostsReducedtime to marketImprovedcustomer satisfactionReducedcarbon emissions13.6%12.7%11.9%11.0%9.2%8.9%17Capgemini Res

84、earch Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USTraditionally,organizations have outsourced supply chains and manufacturing to reduce costs.However,total cost of ownership,including factors such as escalating wages,rising transportation costs,an

85、d import duties in conventional offshore manufacturing hubs,is gradually eroding the cost advantage.Recent research conducted by the Reshoring Institute reveals that China,once perceived as a low-cost manufacturing destination,has experienced substantial increases in labor rates,even bringing it int

86、o line with some European countries.Reindustrialization involves capital investment in equipment,technology,and skill-building.This shift,however,renders domestic manufacturing more competitive,especially when considering increased wages and salaries of production workers,machine operators,manufactu

87、ring supervisors,and managers.14 Reshoring and nearshoring initiatives trim transportation and logistics costs,addressing shipping,customs,currency fluctuations,and lead times,while reducing indirect overhead costs related to supply chain management.Moreover,domestic production can simplify and redu

88、ce the cost of product quality management and,consequently,customer satisfaction.Additionally,the concept of local availability has the potential to attract new customers.Our research reveals that almost half of executives(46%)acknowledge that customers are willing to pay a premium for locally manuf

89、actured or sourced products.Further,a 2023 report revealed that around two-thirds of US respondents regularly sought products that were“made in America.”15Below are examples of reindustrialization initiatives and their associated benefits:BishopSound,a UK audio equipment manufacturer,relocated part

90、of its supply chain from China to Northern England,allowing it to offer lower domestic minimum order quantities and supporting quality control.16 Whirlpool Corporation,a US home appliances manufacturer,shifted part of its production capacity from Asia to the US and Mexico,streamlining logistics and

91、improving product availability.17 General Electric(GE)Aerospace,a US aircraft engine manufacturer,invested over$450 million in manufacturing upgrades in 2023,improving quality control,reducing lead times,and facilitating supplier collaboration.18 Reshoring has enabled Bath&Body Works,a US retail sto

92、re chain,to make its product fully made in America,additionally reducing production time for a bottle of hand soap from three months to 21 days.19 Rheinmetall,a German automotive and defense equipment manufacturer,is building a new plant in Germany to strengthen national security preparedness.With a

93、n investment of 300 million,the factory will create 500 local jobs and will support Germany to be self-sufficient in artillery ammunition.20A supply chain executive from a US-based global automotive organization comments:“Our commitment to reindustrialization extends beyond economic growth.It encomp

94、asses job security for future employees,the nurturing of local talent,imparting social education,championing environmental benefits,and diligently mitigating all risks whether they stem from supply chain vulnerabilities,natural disasters,or ecological impact.Reindustrialization is not just about pro

95、fits;its about shaping a sustainable and resilient future for all.”18Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USA SUPPLY CHAIN EXECUTIVE from a US-based global automotive organization“Reindustrialization is not just about profi

96、ts;its about shaping a sustainable and resilient future for all.”19Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USThe rise of domestic manufacturing and onshoring 0220Capgemini Research Institute 2024The resurgence of manufacturing

97、:Reindustrialization strategies in Europe and the USOrganizations perceive domestic manufacturing as undergoing a pivotal strategic transition Geopolitical pressures are driving the establishment of sovereign manufacturing capabilities across sectors.Beyond mere economic considerations,the imperativ

98、e to promote domestic manufacturing in strategic sectors is essential to re-establishing national security.Once a national sector has in place the capability to meet its own essential needs,it effectively minimizes its vulnerabilities during periods of economic uncertainty or geopolitical threat,by

99、diminishing reliance on external sources.Around six in 10 organizations recognize domestic manufacturing as strategically significant and anticipate that significance increasing over time(see Figure 5).Moreover,organizations are prioritizing oversight of the entire value chain within their domestic

100、markets.This comprehensive approach extends from sourcing raw materials to manufacturing processes and final delivery.Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 5.The majority of organizations believe in the strategic importance o

101、f sovereign manufacturing to ensure national security%of organizations who agree with the below statements We envision a strategic shift towards managingthe entire value chain in our domestic market,spanning from sourcing raw materialsthrough manufacturing and deliveryThe initiative to build soverei

102、gnmanufacturing capabilities in strategic sectors,driven by socio-political as well as businessconsiderations,will persist and strengthenDomestic manufacturing in strategic industriesis imperative to ensure national security63%62%58%21Capgemini Research Institute 2024The resurgence of manufacturing:

103、Reindustrialization strategies in Europe and the USFurther,organizations recognize the significance of cultivating sovereign manufacturing capabilities,particularly in crucial areas such as defense,EVs,pharmaceuticals,semiconductors,batteries,and beyond(see Figure 6).Stefan Wilhelm,associate directo

104、r social impact at Bayer comments:“The disruption of supply chains poses a significant challenge to the scarcity of essential medications.Given the grave impact on public health,especially during crises,nationalizing pharmaceutical production becomes crucial to ensure a more reliable and resilient s

105、upply chain.”Government support is pivotal in nurturing domestic manufacturing capabilities.Our research reveals that 49%of organizations acknowledge that government policies and regulations are supportive in aiding their reindustrialization endeavors.This share rises to 62%among organizations in It

106、aly and 70%in the Netherlands.Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 6.Organizations emphasize the establishment of domestic manufacturing capabilities in defense,EVs,pharmaceuticals,and semiconductors%of organizations that be

107、lieve it is critical to build sovereign manufacturing capabilities in the sectors listed belowTelecommunications infrastructure Renewable energyNuclear energyEV batteries SemiconductorsMedicines and vaccinesElectric vehicles(EV)Aerospace and defense technology and aircrafts77%63%63%61%52%46%44%40%22

108、Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USEuropean and US governments have been actively encouraging and promoting domestic production.For example:The European Chips Act(ECA)21 and the US CHIPS and Science Act22 encourage loca

109、lized semiconductor production for national security reasons.The Net Zero Industry Act(NZIA,2023)intends to meet at least 40%of the EUs green technology needs through domestic manufacturing by 2030.23 Similarly,the Critical Raw Materials Act(CRMA)aims to reduce dependency on the importation of criti

110、cal raw materials by setting a domestic goal of producing at least 10%of the EUs annual extraction demand;40%for processing;and 15%for recycling by 2030.24 The EU FAB network was established to enhance domestic vaccine manufacturing capacities and comprises vaccine producers in the EU(Belgium,Republ

111、ic of Ireland,the Netherlands,Spain).25 Germany is preparing to subsidize the chip factories of Intel,Samsung,and Taiwan Semiconductor Manufacturing Company(TSMC)to the tune of 20 billion,as part of the 43 billion provided for in the ECA.26 For a vehicle to be sold tariff-free in the region,the Unit

112、ed States-Mexico-Canada Agreement(USMCA)requires at least 75%of the vehicles components to be manufactured in North America.29 The Americas Trade and Investment Act(ATIA)seeks to encourage the reshoring and near-shoring of manufacturing supply chains with a heavy footprint in China,such as textiles

113、and apparel.30 The US Inflation Reduction Act(IRA)allocates$60 billion for clean-energy production,including domestic production of solar panels,wind turbines,and batteries.27 The American Nuclear Infrastructure Act of 2021 aims to re-establish US global leadership in nuclear energy and revitalize t

114、he domestic nuclear energy supply chain infrastructure.2823Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USNearly half of all organizations have made investments in reshoring Among all organizations,nearly half(47%)have invested in

115、reshoring.As shown in Figure 7,16%have specifically invested in reshoring manufacturing back to the domestic market,while 31%have adopted a dual reshoring and nearshoring strategy.Looking ahead,29%of organizations are poised to invest in either reshoring or nearshoring within the next 12 months,unde

116、rscoring a continued trend toward strategic localization of operations.In the 12 months to March 2024,as indicated by data from the US Census Bureau,there has been an 80%surge in manufacturing construction spending in the US.31 Moreover,our recent research on investment trends uncovered a parallel t

117、rend,with 52%of organizations opting for nearshoring.This shift potentially aligns with the imperative to comply with increasingly stringent sustainability and ESG regulations,notably including the EUs Corporate Sustainability Due Diligence Directive(CSDDD)and its newly introduced Circular Economy A

118、ction Plan(CEAP),and the USs Uyghur Forced Labor Prevention Act(UFLPA).32Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.Note:Reshoring defined as bringing manufacturing/production back to the domestic market;Nearshoring defined as moving man

119、ufacturing/production to a nearby or neighboring country.FIGURE 7.About half of organizations have invested in reshoring%of organizations who have invested in reshoring or nearshoring the majority of their manufacturing/production47%have invested in reshoringNo plans to invest in eitherreshoring or

120、nearshoringPlan to invest ineither reshoringor nearshoringin the next12 monthsInvested in nearshoringInvested in acombination of reshoringand nearshoringInvestedin reshoring29%16%5%31%19%24Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and t

121、he USOnshore and nearshore manufacturing facilities is expected to increase in the next three yearsThree years ago,manufacturing/production facilities globally were distributed as follows:38%onshore,35%offshore,and 27%nearshore.In the interim,a marked increase in onshore and nearshore operations has

122、 been accompanied by a parallel reduction in offshore facilities.In the coming three years,a further increase is expected in domestic operations,to 49%,and a rise to 34%for nearshore operations.Notably,offshore operations are anticipated to decrease by 18 percentage points compared with the level th

123、ree years ago(see Figure 8).This evolving trend,consistent across countries and industries,signifies a clear emphasis on drawing operations back to the domestic market.Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 8.Domestic manufact

124、uring facilities to increase to nearly 50%in the coming three years Distribution of manufacturing facilities by location as a%of total production capacity38%45%49%27%29%34%35%26%17%Expected in the next 3 yearsToday3 years agoNearshore(i.e.,located in neighboringcountries)Offshore(i.e.,located away f

125、rom domesticcountry,typically in a different time zone)Domestic/onshore(i.e.,located in country ofheadquarters)25Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USFurthermore,organizations indicate their intention to engage in“friends

126、horing,”locating manufacturing/production in countries that are geopolitical and mercantile allies of the organizations home country.On average across all organizations in our survey,this strategy is anticipated to encompass 23%of total manufacturing/production in the next three years.A sustainabili

127、ty executive at a US energy storage and energy-system solutions organization comments:“We are streamlining and considering the potential closure of manufacturing facilities located outside the US and exploring a blend of nearshoring and reshoring.Regulatory requirements and economic considerations a

128、re driving us eventually to bring everything back within the domestic landscape.”A general manager at a European automotive original equipment manufacturer(OEM)said:Nearshoring is a strategic goal for us.In view of political pressures and availability of raw materials,at least 75%of the supply chain

129、 needs to be nearshored or moved to domestic markets in the long run.”33Several organizations have notably prioritized onshoring manufacturing and production as well as new and advanced technologies.Here are some prominent examples from leading organizations in Europe and the US.Intel Corporation(Se

130、miconductor chip manufacturer,US)Reshoring production/building new manufacturing facilityAnnounced a$20 billion initial investment in 2021 and could invest up to$100 billion in Ohio,US,to build the worlds largest chip-making complex,contributing to reshoring and strengthening US innovation.Organizat

131、ionInitiative detailsType of reindustrialization initiativeFord Motor Company(Automobile manufacturer,US)and SK Innovation(Energy and petrochemical company,South Korea)Reshoring production through partnershipSigned a memorandum of understanding(MoU)for a joint venture,BlueOval SK,with an investment

132、of$11.4 billion,to manufacture battery cells and arrays in the US.Micron(Semiconductor chip manufacturer,US)Upgrading manufacturing facilityAnnounced a$40 billion investment in memory chip manufacturing in the US,which will create up to 40,000 new jobs in construction and manufacturing.This is proje

133、cted to bring the US market share of memory chip production from below 2%to up to 10%over the next decade.Qualcomm(Semiconductor chip manufacturer,US)Reshoring production through partnershipWith GlobalFoundries,a US semiconductor manufacturer,committed to a$4.2 billion joint venture to manufacture c

134、hips in New York.Qualcomm announced plans to increase semiconductor production in the US by up to 50%over the next five years.(Continued on the next page.)26Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USOrganizationInitiative deta

135、ilsType of reindustrialization initiativeNearshoring production and upgrading manufacturing facilityVolvo(Automotive manufacturer,Sweden)Opened a new plant in Slovakia to meet continued demand for EVs and establish good logistical and transport links to the rest of Europe.This is the first new Europ

136、ean manufacturing site for Volvo Cars in almost 60 years and is expected to produce over 250,000 cars per year,offering thousands of new jobs in the region.Reshoring production/building new manufacturing facilityInfineon Technologies(Semiconductor manufacturer,Germany)Investing 5 billion in a new se

137、miconductor plant in Dresden,Germany.This project will create around 1,000 jobs and address the global demand for semiconductors.The plant is set to begin operations in 2026.New Balance(Apparel and sportswear manufacturer,US)Building new manufacturing facilityExpanded its domestic manufacturing of a

138、thletic footwear by setting up a new factory in Skowhegan,Maine.Its$65 million investment will add 200 new jobs and double the factorys production capabilities.GlobalFoundries(Semiconductor foundry,US)Building new/upgrading manufacturing facilityIn February 2024,received$1.5 billion in funding throu

139、gh the US CHIPS and Science Act.The company will use the funds to expand its New York facility,modernize its Vermont facility,and build a new fabrication plant.Sanofi(Pharmaceutical and healthcare company,France)Building new manufacturing facilityInvesting 900 million over five years to create two n

140、ew Evolutive Vaccine Facilities(EVFs)in Singapore and in France.These EVFs will be fully digitalized and will leverage advanced modular vaccine manufacturing to produce vaccines at scale.27Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and t

141、he USSource:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives;Capgemini Research Institute analysis.*Total investment includes CapEx and OpEx and funds for building new and/or upgrading existing manufacturing facilities and supply chain initiatives in

142、 or outside domestic market.FIGURE 9.Total investment in reindustrialization in Europe and the US over the next three years is projected to be$3.43 trillion Total investment in reindustrialization is expected to be sizeable We asked executives in our survey how much their organizations had invested

143、in reindustrialization initiatives over the past three years and what they expect to invest in the next three years.Total investment includes capital expenditure(CapEx)and operational expenditure(OpEx).Across all organizations headquartered in Europe(including the UK)and the US in our survey,cumulat

144、ive investment over the next three years stands to increase by 18%to$3.4 trillion,representing a compound annual growth rate(CAGR)of 5.8%(see Figure 9).Of this total,the projected US share is$1.4 trillion,and projected European share(including the UK)is$2 trillion.Total cumulative investment in rein

145、dustrialization over the past 3 yearsProjected cumulative investment in reindustrialization over the next 3 years$2.9 trillion$3.4 trillion28Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USWith regard to the share of total reindustr

146、ialization investment allocated to the domestic market versus that outside the domestic market,on average:54%of the cumulative investment from the past three years was allocated to domestic initiatives,and 46%was directed outside the domestic market.In the next three years,the share for domestic ini

147、tiatives is projected to decrease to 49%,while the share outside the domestic market will rise to 51%.As organizations progress on their reindustrialization journeys,the complexity of reconfiguring supply chains and localizing manufacturing will become evident.Hurdles such as skill shortages,scarcit

148、y of raw materials,and a lack of incentives in the domestic market will likely prompt a rise in short-term investments outside the domestic market,mainly through nearshoring and friendshoring.This approach allows organizations to fund an enhancement of their domestic capabilities and processes,with

149、a strategy to increase local investments in the medium to long term.$3.4trillionis the projected cumulative investment in reindustrialization over the next three yearsTiago Jorge Candeias,senior director operational planning at Infineon Technologies,a German semiconductor manufacturer comments:“To e

150、nhance supply chain resilience and mitigate geopolitical risks,we are diversifying our production partners outside of Europe.Since this demands substantial CapEx,we are considering partnerships with suppliers renowned for their technology and prioritizing relationships with friendly nations.”29Capge

151、mini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 10.Organizations continue to increase their commitment to reindustrializati

152、on initiativesOrganizations plan to allocate a larger share of revenue to reindustrialization initiatives over the next three years Our research indicates that organizations are actively committing to reindustrialization.Organizational investment,expressed as a percentage of revenue,is set to rise f

153、rom an annual average of 7.3%in the past three years to 8.7%in the next three,covering both domestic markets and international initiatives(see Figure 10).Organizations in metals and mining,automotive,transportation,industrial machinery,electronics,and life sciences are poised to allocate greater lev

154、els of investment(as a percent of total revenue)to their reindustrialization initiatives compared with other industries in the next three years.NB:This calculation entailed averaging the cumulative investment,covering both CapEx and OpEx,over the past three years and the next three years,as specifie

155、d by the executives in our survey.The resulting values were subsequently divided by the organizations average annual revenue.Average cumulative investment in reindustrialization initiatives as a%of revenue,by organizational sizeOver the next three yearsOver the past three yearsAverageMore than$75 bn

156、$50 bn$75 bn$20 bn$50 bn$10 bn$20 bnLess than$10 bn20.7%24.4%8.3%9.7%3.9%4.7%2.2%2.6%1.5%1.9%7.3%8.7%30Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USSource:Capgemini Research Institute,Reindustrialization executive survey,February

157、 2024,N=759 executives from organizations who are de-risking their supply chains by investing in other emerging countries to reduce reliance on China.FIGURE 11.Investments in India and Southeast Asia are projected to increase significantly in the next three years Expected change in investment in eme

158、rging countries in the next three years to reduce reliance on ChinaNot sure/not applicableDecrease investmentmoderately/significantly(by less than 50%comparedwith last three years)No changeIncrease investment moderately(by less than 50%compared withlast three years)Increase investment significantly(

159、by more than 50%compared withlast three years)MexicoAfricaSoutheast AsiaIndia65%17%11%2%5%60%20%8%8%4%54%16%12%13%6%13%36%39%8%4%Mounting geopolitical pressures,stringent policies,and changing business dynamics have led companies with supply chains based in China to explore alternatives in other reg

160、ions.In our research,58%of executives said that they are de-risking their supply chains by investing in other emerging countries to reduce reliance on China.To this end,businesses are distributing their critical assets(such as production facilities,warehouses,and logistics centers)across geographies

161、 such as India,Southeast Asia,Africa,and Mexico(see Figure 11).To reduce reliance on China,organizations are increasing their investments in emerging economies 31Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USOur research reveals t

162、hat a significantly higher percentage(74%)of US organizations will increase investment in Mexico compared with 26%of organizations from continental Europe,owing to proximity and the United States-Mexico-Canada Agreement(USMCA).42There are examples of companies seeking to diversify supply chains and

163、reduce reliance on China.Over the past five years,Apples suppliers have invested$16 billion to relocate production away from China.Key players in this shift include Foxconn(Taiwanese chip-making giant and one of Apples largest suppliers),which has moved some of its production capacity to India.43 Ni

164、ke has also been relocating production to South-East Asia and Africa over the past few years.44 Some companies are opting for the“China Plus One”approach:rather than attempt to eliminate China from their supply chains,they are diversifying by directing a portion of investments to other countries wit

165、h closer ties to the US,including India,Mexico,and Vietnam.45 BMW has embraced the China Plus One strategy and has made significant investments in India,establishing local manufacturing facilities.By doing so,the organization is tapping into the countrys skilled workforce and favorable business envi

166、ronment.Moreover,this move allows BMW to reduce its reliance on China and the associated risks.46 In 2022,the annual value of foreign direct investment(FDI)for greenfield projects in China amounted to around$18 billion compared with$80 billion in 2012,a considerable decrease.4758%of organizations ar

167、e de-risking their supply chains by investing in other emerging countries to reduce reliance on China32Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US33Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrializ

168、ation strategies in Europe and the USReindustrialization supports climate goals and decarbonization drives reindustrialization 0334Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USOur research reveals a two-way relationship between r

169、eindustrialization and sustainability.Reindustrialization efforts contribute to climate goals by fostering shorter and more sustainable supply chains,consequently mitigating carbon emissions,particularly Scope 3 emissions.Conversely,decarbonization serves as a catalyst for reindustrialization by spu

170、rring investments in climate technologies such as low-carbon or renewable energy like nuclear or wind power as well as in large-scale battery manufacturing facilities such as gigafactories.Optimism is strong that reindustrialization will help organizations achieve climate ambitionsDuring the reindus

171、trialization process,a focus on sustainability ensures that economic growth is balanced by environmental responsibilities.Manufacturing has a tremendous carbon footprint.Global production sectors are responsible for one-fifth of carbon emissions and 54%of the worlds energy consumption.48Our research

172、 reveals that 56%of organizations believe that reindustrialization will drive a shift toward sustainable manufacturing.A similar percentage of executives(55%)believe that reindustrialization will help their organizations achieve their climate goals,such as achieving net zero GHG 55%of organizations

173、believe that reindustrialization will help achieve their climate goals35Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USemissions.Forty-nine percent also say that success in their reindustrialization efforts is essential to their or

174、ganizations achieving their climate goals(see Figure 12).According to the Reshoring Initiative,a US advocacy non-profit,domestic supply chains are more transparent than offshore and less polluting,potentially reducing the worlds environmental impact by up to 25%,depending on the products involved.49

175、There are notable examples of governments and countries focusing on sustainable reindustrialization.In 2021,French President Emmanuel Macron unveiled a 30 billion plan to“revitalize and reindustrialize”France,which included building a low-carbon plane,a small modular reactor as well as two mega fact

176、ories for the production of green hydrogen by 2030.50 German industrial manufacturer Thyssenkrupp Steel and energy company RWE are partnering to supply green electricity to the first direct reduction plant in Duisburg,Germany which will be generated by RWEs offshore wind farms.51 Beyond environmenta

177、l sustainability,it is also paramount to address the urgent demand for enhancing supply and manufacturing capacities in medicines and vaccines.This is critical to address social sustainability aspects,especially health and wellbeing.Prioritizing sustainability within the healthcare sector is vital f

178、or securing long-term resilience and promoting equitable access to essential treatments and resources.Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 12.Over half of organizations are optimistic that reindustrialization will help them

179、to meet climate goals%of organizations who agree with the below statements My organizations climate goals will only be achievableif our reindustrialization efforts are successfulReindustrialization will help our organizationmeet our climate ambitions in the next three yearsReindustrialization will d

180、rive a shift towardsustainable manufacturing practices56%55%49%36Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US%of organizations currently building or planning to build one or more gigafactories No,we dont have plans currently and

181、 dont foresee anyNo,we dont have plans currently but may in the futurePlanning to build one or more gigafactories in the next 4-5 yearsPlanning to build one or more gigafactories in the next 3-4 yearsPlanning to build one or more gigafactories in the next 1-2 yearsCurrently building one or more giga

182、factories23%16%8%18%12%22%Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=269 executives from organizations in the automotive,battery manufacturing,and energy industries.FIGURE 13.Over half(54%)of automotive,battery manufacturing,and energy organizations are

183、building or have plans to build one or more gigafactories within the next five yearsThe establishment of gigafactories plays a role in the journey towards sustainabilityIn our research,we define gigafactories as large-scale manufacturing facilities that manufacture products associated with electrifi

184、cation and decarbonization technologies(e.g.,batteries for EVs,solar panels).Gigafactories are pivotal in optimizing the supply chain by strategically locating closer to demand centers,and facilitating the transition from internal combustion engines(ICEs)to electric vehicles(EV),significantly enhanc

185、ing sustainability a key catalyst for reindustrialization.ICEs rely on carbon-based fossil fuels emitting substantial pollutants like carbon dioxide.Electric vehicles offer a cleaner alternative.As economies prioritize sustainable transportation,the production of electric vehicles is rapidly escalat

186、ing,with gigafactories playing a central role in producing EV batteries at scale.37Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USAmong the surveyed organizations in automotive,battery manufacturing,and energy industries,reindustri

187、alization strategies feature investments in and establishment of gigafactories.Nearly four in 10 of these organizations(39%)say that setting up gigafactories is critical to achieving net zero targets.Within these industries,over half(54%)are building or have plans to build one or more gigafactories.

188、Specifically,16%are currently constructing one or more gigafactories,while 38%plan to do so within the next five years(see Figure 13).Establishing local gigafactories not only advances sustainability goals but also mitigates supply chain dependencies,ensures a consistent battery supply,and fosters s

189、overeign manufacturing capabilities.Gigafactories are also transforming battery manufacturing,driving innovation,and investing in R&D to improve battery performance,safety,and longevity.Teslas Gigafactory Texas produced its 20-millionth 4680 battery cell(4680 cells offer higher energy density,and th

190、erefore greater energy-storage capacity per unit volume).This efficiency allows EVs to travel longer distances on a single charge,minimizing energy consumption.52Increasingly,organizations are opting for collaborative approaches when it comes to establishing gigafactories,where they can pool resourc

191、es,share expertise,and create synergies.Of the surveyed organizations in automotive,battery manufacturing,and energy industries who are currently building or planning to build one or more gigafactories,93%are establishing all or most gigafactory(s)through joint ventures/partnerships with other organ

192、izations.38Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US%of organizations actual or intended location for building one or more gigafactory 54%21%16%12%38%ChinaUKOther emergingeconomies(e.g.,Mexico,Vietnam,India)ContinentalEuropeU

193、SThe US is the top intended location for gigafactories,followed by continental EuropeMoreover,our research reveals that among the European and US organizations in our survey from automotive,battery manufacturing,and energy industries,the US stands out as a top location for gigafactories for the auto

194、motive,battery manufacturing,and energy industries(54%stated this).Thirty-eight percent stated continental Europe at 38%(see Figure 14).Even before the Inflation Reduction Act passed in the US in August 2022,there was interest in battery manufacturing.In 2021,US automakers announced the investment o

195、f$36 billion in building facilities dedicated to manufacturing EVs and batteries.In the first five months of 2022,automakers announced$24 billion in EV-related investments,almost double the value announced in the same period of the preceding year.53 The passage of the Inflation Reduction Act(IRA)cap

196、italized on this momentum and accelerated transportation electrification in the US.Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=145 executives from organizations in the automotive,battery manufacturing,and energy industries,who are either currently buildin

197、g or planning to build one or more gigafactories.FIGURE 14.54%of organizations plan to set up a gigafactory in the US39Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US State-level incentives,preferential loans,and other forms of sup

198、port:Many US states offer rebates and tax deductions to make the transition to electric vehicles more attractive such as direct cash rebates upon purchasing an EV,waiving of sales tax or registration fees for EVs,allowing EVs to use high-occupancy vehicle(HOV)lanes,even with a single occupant,and di

199、scounts on monthly electricity bills.Also,rebates for the installation of level 2 home charging stations.57 Access to mineral resources:The International Energy Agency(IEA)predicts a substantial increase in global mineral demand by 2040,driven by EVs and battery storage.North America holds a signifi

200、cant advantage in this industry owing to its abundant mineral resources;Canada is a top producer of essential minerals.The prospect of building North American supply chains from mineral exploration to production for these elements presents an important opportunity for job creation and economic growt

201、h while ensuring responsible mining practices and boosting battery production.58 Factors that make the US a favored location for gigafactories include:Tax credits and incentives from the US IRA:Investment tax credits:The Advanced Manufacturing Production Tax Credit(AMPTC)and Advanced Energy Project

202、Investment Tax Credit(AEPITC)have reduced the cost of manufacturing high-performance batteries 30%on average.54 This has resulted in more gigafactory announcements in the US.US gigafactory capacity in the pipeline through 2030 has increased from around 700 GWh in July 2022(prior to the IRA)to just o

203、ver 1.2 terawatt-hours(TWh)as of July 2023.55 Consumer tax credits:Credits vary based on the battery capacity of the vehicle and gradually phase out as manufacturers reach a predetermined sales volume.Up to$7,500 in tax credit for EVs with a battery capacity of at least 16 kWh.(The credit amount dec

204、reases with lower battery capacity).5640Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USNotable examples of companies that have set up/or are setting up a gigafactory in the US:Teslas Gigafactory Nevada,which produces batteries and

205、Tesla Semi vehicles;Gigafactory New York,which focuses on solar roof tiles and superchargers;and Gigafactory Texas,which opened in 2022,and serves as Teslas headquarters and assembly location.59 FREYR Battery,a Norwegian organization specializing in clean,next-generation battery-cell production,is s

206、etting up a gigafactory in Georgia,US,for its multi-phase Giga America clean-battery manufacturing project.The organization is investing around$1.7 billion in this initial phase.60 General Motors and LG Energy Solution have formed a joint venture called Ultium Cells LLC.They are investing over$2.3 b

207、illion to construct a battery-cell manufacturing gigafactory in Tennessee,US.61 In October 2023,Toyota announced an$8 billion investment that will create around 3,000 jobs at its Toyota Battery Manufacturing North Carolina(TBMNC)gigafactory.This brings total investment in TBMNC to around$13.9 billio

208、n and job creation to more than 5,000.62Europe has also witnessed a gigafactory surge.The incentives driving this trend include:European gigafactory projects benefit from initiatives such as the EUs Innovation Fund,which aims to accelerate the development of low-carbon technologies,including those r

209、elated to energy storage and electric mobility.In addition,the Important Projects of Common European Interests(IPCEI)scheme supports innovative projects,including gigafactories,which contribute to European industrial competitiveness.63,64 The EU announced 4 billion in state aid investments to suppor

210、t the establishment of new factories producing electric batteries for cars,heat pumps,and solar panels.65Below are notable examples of companies that have or plan to set up one or more gigafactories in Europe:Northvolt AB,a Swedish battery developer and manufacturer,specializing in lithium-ion techn

211、ology for EVs,has an active gigafactory in Northern Sweden.It began shipments of batteries in May 2021.66 The German government approved state aid amounting to 902 million to assist Northvolt in building a gigafactory for EV batteries in Heide.67 Eurocell,the British-Korean battery organization,is b

212、uilding its first European gigafactory in the Netherlands.This factory will supply battery cells across the continent.The organization plans to construct the gigafactory in two phases with planned initial investment of$800 million,which could rise to$2 billion by 2028.6854%of automotive,battery manu

213、facturing,and energy organizations are building or have plans to build one or more gigafactories within the next five years41Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USDigital technologies are a critical enabler of reindustrial

214、ization0442Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USThere is a commitment to increasing investments in digital technologies to support reindustrializationOrganizations are committed to driving reindustrialization through inve

215、stment in digital.Our research reveals a prevailing optimism,with 68%of executives expressing confidence in reindustrialization as a driver of innovation and technical advancement.This positive outlook underscores a shared belief that integrating digital technologies into reindustrialization will al

216、so boost productivity(63%)(see Figure 15).Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 15.Organizations will amplify investments in digital technologies to bolster reindustrializationPERCENTAGE OF TIME SAVED BY USING GENERATIVE AI T

217、O ASSIST IN CODE GENERATION15%26%43%of organizations who agree with the below statements We will increase our investments in digitaltechnologies(e.g.,data,cloud,AI)to boost productivity due to reindustrializationWe are optimistic about the prospects of reindustrialization driving innovation and tech

218、nical advancement68%63%43Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USEnhancing capabilities of existing manufacturing facilities is the primary focusThe immediate focus of industrial development seems to lie in augmenting the ca

219、pabilities of current manufacturing facilities.A significant 60%of executives express a preference for the“brownfield approach,”which involves upgrading existing manufacturing facilities(see Figure 16).This strategy is indicative of the effort to harness digital technologies to optimize the efficien

220、cy of established infrastructure,boosting production.Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 16.Organizations focus on upgrading manufacturing facilities as part of their reindustrialization efforts%of organizations specifying

221、their strategy for smart and advanced manufacturing facilitiesYet to be decidedBoth greenfield and brownfieldBrownfield-upgrading existingmanufacturing facilitiesGreenfield-setting up advancedmanufacturing facilities from scratch21%12%7%60%44Capgemini Research Institute 2024The resurgence of manufac

222、turing:Reindustrialization strategies in Europe and the USAmong organizations deploying a brownfield strategy,28%had upgraded their manufacturing facilities in the preceding year,with half gearing up to commence similar initiatives within the next year or two.Among organizations employing a greenfie

223、ld strategy for establishing new factories,12%have already built one within the last year,and 30%will embark on similar endeavors in the upcoming year or two(see Figure 17).German pharmaceutical and biotechnology company Bayer is investing 130 million in a new highly digitalized and highly automated

224、 manufacturing facility in Berlin.The facility serves critical manufacturing areas with high medical demand,such as products in the field of ophthalmology,and strengthens innovation in the region.69This approach reflects a concerted effort to harness and enhance existing infrastructure through the i

225、ntegration of digital technologies,with the aim of amplifying efficiency,elevating production levels,and potentially establishing innovative smart manufacturing facilities.Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,057 executives from organizations wit

226、h a brownfield strategy,N=423 executives from organizations with a greenfield strategy.FIGURE 17.Nearly 30%of organizations have upgraded their existing manufacturing facilities within the past year%of organizations specifying their implementation plans for building and upgrading smart and advanced

227、manufacturing facilitiesNo plansAfter 24 monthsIn the next 12-24 monthsIn the last 12 monthsBrownfield:Upgradeexisting facilitiesGreenfield:Setup new facilities50%16%6%28%12%30%37%21%45Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the U

228、SOrganizations will harness technologies such as AI,machine learning(ML),automation,and data analytics in their reindustrialization effortsAt present,nearly one-quarter of organizations surveyed use technologies extensively for more than half of processes and activities in their reindustrialization

229、processes.This is expected to increase to almost 50%of organizations in the next three years(see Figure 18).Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 18.Extensive use of technologies is expected to surge in the next three years%o

230、f organizations who use(or plan to use)technologies extensively for reindustrialization34%48%26%58%55%48%47%40%38%20%15%27%18%38%Automation/roboticprocess automation IndustrialroboticsArtificial intelligencemachine learningInternet ofthings(IoT)/IIoT CloudcomputingData andanalytics AverageWill use e

231、xtensively in the next three years(for more than 50%of processes and activities)Use extensively at present(for more than 50%of processes and activities)46Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USThis reflects a trajectory tow

232、ard a technologically empowered industrial landscape.The integration of AI/ML promises to enhance decision-making processes;automation and robotics are expected to streamline operations and reduce labor costs;and cloud and data analytics will play a pivotal role in extracting meaningful insights at

233、speed.For example:Tesla has applied AI robotics to automate assembly operations.The company equips robotic arms with computer vision technology and ML,which has improved efficiency and reduced the number of errors.70 Siemens is contributing to the acceleration of the additive manufacturing(AM)indust

234、ry in the US supporting the local AM machine builder community,providing motion control,automation hardware,digitization software,and technology expertise.From its Charlotte Advanced Technology Collaboration Hub(CATCH),Siemens will offer an ecosystem platform for machine builders,machine users,and a

235、dditive design engineers.71 Procter&Gamble leverages collaborative robots or“cobots”to streamline their manufacturing processes.These versatile robots handle diverse tasks like assembling and packaging products while upholding stringent hygiene standards necessary in the industry.72 BMW employs AI-d

236、riven automated guided vehicles(AGVs)in its manufacturing warehouses to streamline intralogistics operations.These AGVs follow predetermined paths,automating the transportation of supplies and finished products,thereby enhancing inventory management and visibility.73 General Electric(GE)has incorpor

237、ated AI algorithms into its manufacturing processes to analyze extensive data from sensors and historical records.This enables GE to identify trends,predict equipment issues,and enhance processes,leading to reduced downtime,improved equipment effectiveness,and increased manufacturing efficiency.7468

238、%of organizations believe reindustrialization will drive innovation and technical advancement47Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USTIAGO JORGE CANDEIASInfineon Technologies“Currently,the majority of new factories are ful

239、ly automated,with systems handling all transactional events autonomously.This generates vast amounts of data,and consequently,we are making significant investments in data analytics and AI to optimize workflows,processes,and tasks.”Tiago Jorge Candeias from Infineon Technologies adds:“Currently,the

240、majority of new factories are fully automated,with systems handling all transactional events autonomously.This generates vast amounts of data,and consequently,we are making significant investments in data analytics and AI to optimize workflows,processes,and tasks.”Moreover,in response to the growing

241、 threat of cyberattack,60%of organizations are significantly ramping up their investments in cybersecurity solutions.The US government,for example,plans to invest billions in the domestic manufacturing of cargo cranes to counter fears that the prevalent use of Chinese-built cranes that feature advan

242、ced software at many US ports poses a national security risk.7548Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US%of organizations specifying the extent of usage of emerging technologies for reindustrialization in the next three yea

243、rsWill use extensively(for morethan 50%of processes and activities)Will use moderately(for 20-50%of processes and activities)Will use rarely(for less than20%of processes and activities)No plans to usein the next 3 yearsAverageQuantumtechnologiesAR/VR and immersivetechnologies forindustrial applicati

244、onsClimate tech/clean techSynthetic biology/bioeconomyAR/VR and metaversefor consumer applicationsDigital twinsBlockchainGenerative AI5G and edgecomputing31%40%24%5%31%49%14%6%29%38%30%4%21%39%33%6%18%52%26%4%16%49%25%10%15%42%38%5%15%49%32%5%14%41%38%7%21%44%29%6%Use of emerging technologies such a

245、s 5G/edge,generative AI,and digital twins is poised for a healthy upswing in the coming three yearsOur research suggests that organizations will embrace emerging technologies to propel their reindustrialization initiatives forward.Twenty-one percent of organizations have strategic plans extensively

246、to incorporate cutting-edge technologies such as 5G,edge computing,generative AI,blockchain,and digital twins into their daily operations and processes.Moreover,an additional 44%intend to adopt these technologies moderately as part of their reindustrialization endeavors(see Figure 19).Source:Capgemi

247、ni Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 19.Organizations plan gradually to adopt emerging technologies for reindustrialization in the next three years49Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization stra

248、tegies in Europe and the USThese technologies are employed in various ways to enhance manufacturing:Siemens and Microsoft joined forces to integrate ML with industrial edge technology,facilitating the analysis of images and videos to create AI vision models for use on the shop floor.This showcases t

249、he potential applications of generative AI in manufacturing settings.76 Mercedes-Benz is creating digital twins to design and operate its manufacturing and assembly facilities.The digital twin helps ensure that assembly lines can be retooled,configured,and optimized in physically precise simulations

250、.77 Additionally,Mercedes-Benz can synchronize plant locations anywhere in the world with its in-house MO360 Data Platform.Organizations are investing in technologies to enhance sustainability within their reindustrialization initiativesOrganizations recognize the vital connection between digitaliza

251、tion and sustainability in their reindustrialization endeavors.Close to 60%affirm that the success of their reindustrialization hinges on both enhanced digitalization and sustainability within their industries.Moreover,with a clear understanding of technologys pivotal role in addressing climate chan

252、ge,62%of organizations are investing in digital technologies for reindustrialization in order to advance their sustainability objectives(see Figure 20).Our recent research on the eco-digital eraTM shows that,by scaling up digital adoption,organizations have the potential to achieve a reduction of ov

253、er 30%in GHG emissions over the next five years.7850Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USPERCENTAGE OF TIME SAVED BY USING GENERATIVE AI TO ASSIST IN CODE GENERATION15%26%43%of organizations who agree to the below stateme

254、nts Reindustrialization of our economy will be successful if our industries become more digital and more sustainable We are investing in digital technologies in our reindustrialization initiatives to combat sustainability and climate-change challenges 62%59%Source:Capgemini Research Institute,Reindu

255、strialization executive survey,February 2024,N=1,300 executives.FIGURE 20.A majority of organizations are investing in digital technologies for reindustrialization to combat climate changeExamples below illustrate how digital technologies can enhance the sustainable reindustrialization:At its LeVaud

256、reuil site in France,Schneider Electric uses digital twins of its plant installations.The digital twin is helping Schneider reach its net zero goal by 2025 by supporting greater efficiency and cost savings.For example,Schneider has reduced material waste 17%.79 BMW utilizes AI to minimize waste in t

257、he production and use of batteries.Smart manufacturing processes guided by AI algorithms help reduce material wastage,making the production of batteries more environmentally friendly.8051Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the

258、 USReindustrialization requires a highly skilled workforce 0552Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US%of organizations who agree with the below statements Reindustrialization is expected to increasemanufacturing employment

259、 in our industryReshoring manufacturing/productionwill bring back domestic manufacturing jobsWe have to increase wages to retainour manufacturing workforce in our domestic market64%60%53%Reindustrialization is expected to create jobs and raise wages in the domestic marketSixty-four percent of organi

260、zations in our survey expect reindustrialization to increase wages for their domestic workforce and 60%expect a boost in manufacturing jobs.Around half expect an increase in employment in their industries(see Figure 21).Reshoring and foreign direct investment(FDI)are continuing to bring jobs to the

261、US,with 364,000 jobs announced in 2022,up from 238,000 in 2021.The total number of jobs announced since 2010 is now approaching 1.6 million.New investments in US manufacturing by domestic and foreign companies surged after the US IRA and Chips and Science Act were passed.81 Source:Capgemini Research

262、 Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 21.A majority of organizations believe reindustrialization will drive wages up and increase manufacturing employment 53Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategi

263、es in Europe and the USOrganizations recognize that the shift to reindustrialization necessitates a highly skilled workforce Our research reveals that the majority(72%)of organizations believe that reindustrialization will create demand for a more skilled manufacturing workforce.About half(51%)will

264、need to upskill their current workforce to meet demand (see Figure 22).Reindustrialization will require significant upskilling programs especially given the aging population of the traditional manufacturing workforce.Nearly half of organizations(48%)believe that they need to engage and prepare the y

265、ounger generation for effective contributions to their ongoing reindustrialization due to the aging workforce.However,attracting young talent to the manufacturing industry poses Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 22.Most o

266、rganizations agree that reindustrialization will require a more highly skilled manufacturing workforce%of organizations who agree to the below statements We must undertake a substantial upskillinginitiative for our current workforce to supportour reindustrialization endeavorsReindustrialization will

267、 require an industrialworkforce skilled in creative disciplines,digital technologies,and engineeringThe shift towards reindustrialization willnecessitate a more highly skilled industrialworkforce than traditional manufacturing labor72%69%51%54Capgemini Research Institute 2024The resurgence of manufa

268、cturing:Reindustrialization strategies in Europe and the USa challenge.Angel Fraile,corporate social responsibility director at Endesa,a Spanish utility company,affirms:“Attracting new generations to pursue manufacturing jobs is difficult as there is a lack of enthusiasm for such roles.Making these

269、jobs appealing to young potential workers is critical.”Similarly,an operations executive from a global automotive organization in the UK adds:“We face challenges in sparking enthusiasm among young people for careers in engineering and manufacturing.Extensive efforts are underway with colleges and un

270、iversities to reignite excitement.Young talent have more of an appetite for these roles in India and other Asian countries.”Our research indicates that reindustrialization initiatives are expected to lead to an average 13.4%increase in domestic labor costs over the next three years.However,some of t

271、hese costs could be offset by factors such as wage inflation in traditionally outsourced nations and the adoption of digital technologies,including automation,as discussed in the previous section.LAURENCE MONTANARIVice president transportation and mobility at Dassault Systmes“There is a shortage of

272、new talent in the automotive industry.We need skills such as molecular chemists and systems engineers to develop the next generation of EVs,batteries,and mobility experiences.It is important for organizations to foster the development of this kind of talent.55Capgemini Research Institute 2024The res

273、urgence of manufacturing:Reindustrialization strategies in Europe and the USThe manufacturing workforces skill mix is anticipated to shift towards advanced digital skills over the next three yearsMost(64%)organizations believe reindustrialization efforts will change the skills mix of their manufactu

274、ring workforce.The share of the workforce with advanced digital skills is projected to increase from 31%today to 53%in the next three years(see Figure 23).In March 2024,ABB,a Swiss automation technology provider,opened its$20 million expansion of its US robotics headquarters increasing the plants ma

275、nufacturing capacity by 30%.Funds were also invested towards doubling the capacity of its training facility.It can now train 5,000 of its customers employees annually on the latest robotics technologies.82Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300

276、executives.*Question asked was:Please estimate the share of your manufacturing workforce today that have the below skills and the share you anticipate needing the skills in the next three years.FIGURE 23.The share of the manufacturing workforce with advanced digital skills is antici-pated to increas

277、e from 31%to 53%in the next three yearsAverage share of digital skills in manufacturing workforce,current vs three years time69%47%31%53%Advanced digital skills e.g.,AI,digital twins,robotics)Essential digital skills(e.g.,use of digital deviceslike a computer/tablet/mobile for work tasks)56Capgemini

278、 Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US%of organizations who say the skill is critical to reindustrialization efforts(top 10 skills)Additive manufacturing such as 3-D printingGenerative AI Data privacy/cybersecurity Internet of thin

279、gs(IoT)Robotics and automationCloud computingAI and machine learningDigital twinData analytics/data scienceSupply chain management67%71%73%77%65%58%57%50%50%65%Source:Capgemini Research Institute,Reindustrialization executive survey,February 2024,N=1,300 executives.FIGURE 24.Supply chain management

280、is the top critical skill for reindustrialization efforts Most organizations(77%)cited supply chain management as the skill most important to reindustrialization.Hard skills related to data analytics,digital twins,AI/ML,cloud computing,and robotics follow in terms of significance for reindustrializa

281、tion efforts(see Figure 24).Laurence Montanari,vice president transportation and mobility at Dassault Systmes,a French company specializing in digital twins,adds:“There is a shortage of new talent in the automotive industry.We need skills such as molecular chemists and systems engineers to develop t

282、he next generation of EVs,batteries,and mobility experiences.It is important for organizations to foster the development of this kind of talent.A supply chain executive from a US-based automotive organization comments:“To bridge the skills gap within the organization,we are enhancing the capabilitie

283、s of existing employees,fostering education in EV manufacturing,collaborating with universities,and advocating for science,technology,engineering,and mathematics(STEM)education.”In addition,there are soft skills that the manufacturing workforce must tackle.According to a report from the World Econom

284、ic Forum,by 2025,50%of all employees will require reskilling owing to the adoption of new technologies.Reskilling can take up to six months,depending on the industry and required skill set.Critical thinking and problem-solving will be the skills most in demand,along with self-management skills such

285、as active learning and resilience.8357Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USHow to accelerate reindustrialization 0658Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europ

286、e and the USWith insights based on our research,our discussions with industry experts,and our experience of driving intelligent industry transformations at global organizations,we recommended the following key steps for organizations to fully harness the opportunities of reindustrialization.123456Un

287、dertake a strategic assessment to formulate an effective reindustrializationstrategyPrioritize environmental sustainability in the reindustrialization strategyInvest in the skills development of the manufacturing workforceIncorporate advanced manufacturing technologies into current and planned facil

288、itiesFoster collaborative initiatives with like-minded partners to enhance domestic industrial capabilitiesProactively engage with policymakers and regulators to anticipate and react quickly to dynamic legislation and incentives 1.Undertake a strategic assessment to formulate an effective reindustri

289、alization strategyOur research supports the idea that there is an ongoing shift in the traditional“rules”regarding geopolitics and globalization.More executives recognize the impact of geopolitics on their business and acknowledge globalization need not be the only path to growth.Indeed,our research

290、 reveals reindustrialization and a focus on domestic manufacturing can have significant business and sustainability benefits.Given how complex and potentially volatile reindustrialization is,organizations must begin their journeys with a geopolitical evaluation to determine how politics and geograph

291、y will influence their reindustrialization strategy and initiatives.Over half(52%)of organizations cite geopolitics as a challenge in formulating reindustrialization strategies.For example,it is crucial for organizations to consider market access and political relationships between countries,country

292、 stability and security,and trade policies and tariffs.In todays dynamic business landscape,organizations should also conduct a meticulous bottom-up assessment of their supply chains and manufacturing footprints,creating a well-defined business case for reindustrialization.This involves a comprehens

293、ive evaluation of critical factors influencing operational effectiveness,including:Potential cost efficiencies Productivity gains Day-to-day impact on production Alignment with sustainability goals.59Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in E

294、urope and the USIn this research,we focus on the positives of moving manufacturing and production closer to the domestic market,from sustainability and geopolitical to cost and resilience benefits.However,every organization should fashion its own approach to reindustrialization.For example,an organi

295、zation with a string of operating factories in place could consider modernizing them with advanced technologies to strengthen its domestic operations.Equally,they might bring external operations closer to home or decide to maintain their offshore positions owing to cost constraints.The“why”of indust

296、rialization should be clear to all organizations,but the“how”will be unique to each particular organization.A key challenge organizations must address is the need to launch reshoring initiatives while maintaining existing supply chains and supporting their transformation.All of this must be consider

297、ed without negatively impacting products and customers.A manufacturing and supply chain executive from a prominent European chemical organization remarks:“As an organization,we face the delicate task of serving our existing customers while simultaneously driving the reindustrialization journey.Manag

298、ing these dual priorities with the same resources poses a significant challenge.”A strategy executive from a leading European industrial manufacturer says:“Reindustrialization is indeed a multifaceted endeavor.When we consider aspects like the supply chain,industrialization,and the entire value chai

299、n,the complexity becomes evident.The challenge lies in sourcing qualified individuals,which is time-consuming.Additionally,configuring local SAP and ERP systems can be quite intricate.Key priorities include swift decision-making,assembling efficient project teams,and securing adequate investment,whi

300、ch is essential for allocating resources and funding.”Evaluating the business value of various activities at a granular level,based on the needs of different customers,products,and distribution channels is also advisable.Factors such as supply chain resilience,market proximity,and workforce capabili

301、ties should inform this tailored approach.A chief executive from a prominent US technology organization highlights a nuanced approach for their optimal operational outcomes:“In our manufacturing process,there are assembly factories where key components are still imported from Asian countries,and the

302、n the final assembly takes place in newer facilities in Mexico via nearshoring.This approach allows for efficient production and distribution of goods.”It is crucial not to overlook the development of domestic capabilities in pivotal categories such as defense,EVs,pharmaceuticals,semiconductors,and

303、batteries(as previously discussed in the report).This aspect should be actively incorporated into the overall long-term strategy to reduce dependencies on foreign markets.Moreover,a comprehensive assessment of all these factors is essential,as 65%of organizations in our research identify capital inv

304、estment challenges as a key hurdle in reindustrialization.This strategic evaluation should go beyond immediate gains,to foster a forward-looking perspective to ensure sustainable and resilient operations in the evolving industrial landscape.60Capgemini Research Institute 2024The resurgence of manufa

305、cturing:Reindustrialization strategies in Europe and the US61The resurgence of manufacturing:Reindustrialization strategies in Europe and the US2.Prioritize environmental sustainability in the reindustrialization strategyOrganizations face mounting pressure to minimize their carbon footprint and bol

306、ster environmental stewardship.Given the significant carbon footprint of production,there is an urgent need for manufacturing companies to implement decarbonization.Moreover,domestic supply chains are more transparent and less polluting than offshore ones.Global value chains frequently result in ove

307、rproduction and waste.Consequently,it is imperative for organizations to prioritize sustainability in their reindustrialization strategies.By reshoring or nearshoring,reindustrialization presents an opportunity to significantly reduce GHG emissions in the following impactful ways:Firstly,this approa

308、ch minimizes long-distance transportation,reducing emissions,especially Scope 3 emissions from extended supply chains,and it also helps to protect biodiversity and raw material availability.Secondly,it provides organizations with greater control over their operations and production processes.Bringin

309、g supply chains closer to the domestic market enhances oversight,supporting more sustainable practices and adoption of circular models.Thirdly,organizations can transition away from carbon-intensive fossil fuels by adopting low/no carbon energy sources like biomass,heat pumps,and electric heating.Sw

310、itching to renewable energy sources presents another impactful avenue for reducing carbon emissions.Organizations can also monitor existing production processes and advocate for the use of sustainable materials and circular practices.By embracing practices like recycling,remanufacturing,repair,and r

311、efurbishment,companies can lessen reliance on scarce resources and component suppliers,fostering agile and resilient supply chains.Furthermore,embracing circular business models opens the door to the development of new value chains,aligning with the increasing emphasis on localized production capabi

312、lities.Technologies such as radio frequency identification(RFID),blockchain,and IoT can enhance such circular strategies.For example,Fairphone manufactures mobile phones with a body crafted from recycled aluminum and a back cover composed entirely of recycled plastic.The company also has various reu

313、se and recycle programs to ensure the sustainability of its devices.84 A manufacturing and supply chain executive from a large European chemical organization remarks:“Sustainability is a key agenda item across the firm.We are committed to recycling and promoting recycled products within our existing

314、 portfolio and are developing mid-and lower-priced products that incorporate reused materials.”Finally,active collaboration with existing supply chain partners is essential for exploring ways to minimize the carbon footprint throughout the production,transportation,and distribution processes.An oper

315、ations executive from a global automotive organization from the UK adds:“The demand for sustainability and ethical practices in supplier sourcing is rapidly increasing.Customers are questioning sourcing methods,and if we cant address their concerns,we risk losing their trust and loyalty.In todays ma

316、rket,reducing carbon emissions in our supply chain is imperative for maintaining relevance and credibility.”62Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the USSTEFAN WILHELM Associate director social impact at Bayer“During reindustri

317、alization,the focus remains on retaining talent.Our goal is to enhance our peoples skills,enabling us to repurpose their abilities in other roles or with new responsibilities.”Capgemini Research Institute 202463Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization stra

318、tegies in Europe and the US3.Invest in the skills development of the manufacturing workforceA key obstacle to reindustrialization globally is a lack of skilled industrial workers in domestic markets,with 64%of organizations citing this.This challenge is compounded by the ongoing trend of reshoring a

319、dvanced technologies in which skills have been primarily cultivated offshore,particularly in Asia.As highlighted earlier in the report,the shift toward reindustrialization necessitates an alteration in the organizations skills mix for the manufacturing workforce,intensifying competition to attract t

320、alent.Reindustrialization initiatives should commence with upskilling and expediting the training of both the existing and upcoming workforce.Excessive offshoring has led to a scarcity of qualified workers,complicating talent acquisition for organizations but they can ring promising but unskilled in

321、dividuals into the workforce by offering essential skills training in industrial construction and manufacturing,and fundamental digital skills to meet the demands of basic manufacturing operations.A strategy executive from a large European industrial manufacturer remarks:“In manufacturing jobs,a not

322、iceable scarcity of fundamental skills is readily apparent.Furthermore,this deficiency extends beyond mere basics to advanced proficiencies.”Organizations must upskill those already in the workforce to align with the demands of advanced manufacturing,digital skills,and emerging technologies.Stefan W

323、ilhelm from Bayer comments:During reindustrialization,the focus remains on retaining talent.Our goal is to enhance our peoples skills,enabling us to repurpose their abilities in other roles or with new responsibilities.64Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrializ

324、ation strategies in Europe and the USTechnologies play a role in supporting employee skill enhancement.For example,generative AI can provide personalized training tailored to each employees role,job site,or team,ensuring relevant content.It can also enable quick access to pertinent data to facilitat

325、e self-paced learning.As previously highlighted,a primary challenge lies in attracting and retaining talent,particularly among younger workers.To address this and narrow the skills gap,organizations can:Highlight the advantages of working in todays manufacturing landscape(e.g.,creating something tan

326、gible,advancing skills with the latest technologies,improving marketability)to appeal to the younger workforce.Implement incentives,such as higher wages and overtime pay,to counter the perception that manufacturing jobs are not lucrative.Collaborate with government agencies and workforce departments

327、 to offer training and development programs.Six in 10(61%)organizations in our survey emphasize the importance of post-secondary education and training in advanced manufacturing.Here are some examples of such public-private partnerships(PPPs):The Manufacturing USA network comprises 16 institutes and

328、 aligns workforce training with industry needs,defining new career paths in automation,robotics,AI,and data analytics.85 The European Battery Academy will train,reskill,and upskill around 800,000 workers by 2025.The training programs cater to the demands of the evolving battery industry,including lo

329、w-emission mobility and energy storage.86 The US Department of Energy,the US Department of Labor,and the AFL-CIO have launched a national workforce development strategy for lithium-battery manufacturing.87 Germany implemented its reworked Skilled Immigration Act in November 2023 to address the growi

330、ng demand for skilled labor.The new act lowered the barriers to immigration for skilled workers outside the European Union(EU)and made it easier for skilled workers with vocational training and individuals with practice knowledge to immigrate.88Lastly,because reshoring is a multifaceted strategic in

331、itiative,it demands well-trained and empowered leaders.A manufacturing and supply chain executive from a large European chemical organization underscores this point:“A significant challenge lies in leadership empowerment.We aspire to shift decision-making downward within the organization and to trai

332、n our leaders to empower their teams and enable effective decision-making at all levels.”65Capgemini Research Institute 2024The resurgence of manufacturing:Reindustrialization strategies in Europe and the US4.Incorporate advanced manufacturing technologies into current and planned facilitiesIntegrat

333、ing advanced technology into existing and upcoming manufacturing facilities serves as a pivotal solution to the prevalent challenges in manufacturing,ranging from supply chain intricacies to production and labor issues.To enhance their reindustrialization capabilities,organizations should actively embrace these technologies and cultivate strategic partnerships with technology providers.Additionall