Homeward bound: Manufacturing for a new world

A monthly newsletter discussing cutting-edge insights and sharing actionable advice on harnessing the power of tech for growth. 

A seismic shift is underway as companies pivot towards optimized domestic or nearshore manufacturing, fueled not only by geopolitical considerations but also by a drive towards reindustrialization and digital advancement. This transformation is a once in a lifetime opportunity for businesses to harness the power of technology to create a new and improved industry – one that’s more innovative, more sustainable, and more resilient.

What’s everyone saying?

• From the US-China rivalry to the war in Ukraine, recent events have led governments to acknowledge the need to retain or nearshore domestic production capabilities in key areas. “The understanding of what matters to national security has [...] expanded, as countries seek to advance or protect everything from software and microchips to pharmaceuticals and foodstuffs,” writes Foreign Affairs Magazine.

What do we have to say?

• As our newest Capgemini Research Institute report mentions, last year, S&P 500 chief execs used the word “geopolitics” 12,000 times across earnings calls and corporate filings – three times as much as in 2021. 

• The need to ensure security of supply is driving a wave of onshoring and nearshoring, with 63% of organizations recognizing the importance of establishing a domestic manufacturing infrastructure to ensure national security.

• This is especially the case among companies with China-based supply chains. Our report shows 58% of organizations are investing in regions like Southeast Asia, Africa, or Mexico to reduce reliance on what the EU has dubbed a “systemic rival”. As a result, the annual value of foreign direct investment for greenfield projects in China plummeted from $80 billion in 2012 to $18 billion in 2022.

• But while ongoing geopolitical uncertainties have presented significant challenges, they have also opened up valuable opportunities for companies to enhance their resilience.

• Our research shows that reindustrialization contributes to climate goals by fostering shorter supply chains and limiting Scope 3 emissions, but also that decarbonization itself can accelerate reindustrialization, by spurring investments in climate tech or gigafactories. In fact, 13.6% of executives project that reindustrialization will help them lower emissions in the next three years.

• To make the most of their reindustrialization strategy, companies will need to invest in technologies such as AI, machine learning, automation, and data analytics. Already, 62% are already doing so, with a specific view to advance their sustainability objectives. That is precisely where Capgemini comes in, helping clients across all industries harness technology to support their reindustrialization efforts while reaching their sustainability, resilience, and efficiency goals.

Head here to download our Reindustrialization of Europe and the US report and get a complete picture of the statistics and global context behind reindustrialization.

Who’s doing it right?

• Siemens and Capgemini are spearheading innovation in the battery industry with a holistic digital transformation strategy, showcasing the advantages of integrating technology into industrial practices and adopting data-driven decision-making. They are leveraging a powerful combination of digital twins, advanced simulation, data integration and analytics, and low-code application development. By integrating these complementary digital capabilities, Siemens and Capgemini are empowering battery manufacturers to quickly ramp up production, enhance quality and efficiency, and future-proof their operations – transforming the industry and accelerating the race to build the next generation of gigafactories.

What’s the bottom line?

• Geopolitics are changing the rules of the game, making secure, intelligent industry more important than ever. Companies are now actively exploring alternatives to globalization, hoping to reap the business and sustainability benefits of on and nearshore manufacturing.

• Thinking of reindustrializing? Make sure to consider market access and political relationships between countries, country stability and security, and trade policies and tariffs. Successful reindustrialization efforts cannot be achieved without embracing technological innovation. Companies have much to gain by leveraging the latest advancements in data analytics and digital technologies to optimize operations in their current and planned facilities and stay competitive in the global market.  

Looking for more? 

• The automotive industry is undergoing a software-driven transformation. Find out more about how companies like Plastic Omnium are developing solutions to meet evolving customer needs.

• Speaking of Intelligent Industry, Capgemini was on-site at Hannover Messe, one of the world’s largest manufacturing fairs, to share some of our future-focused digital and sustainability solutions. Check out a glimpse of our time there. 

• And keep up with all of our latest insights on the future of business and tech here.

And you, what are you saying? 

Have geopolitical issues affected your activities? Are you exploring new ways to use technology for reindustrialization efforts? Share your thoughts with us in the comments section!