Here is the entire report: The resurgence of manufacturing: Reindustrialization of Europe and the US – 2026 (pdf)
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The resurgence of manufacturing: Reindustrialization of Europe and the US – 2026, the third edition of the Capgemini Research Institute’s annual research, examines how organizations are reshaping manufacturing and supply chain strategies in an increasingly volatile global environment. Since 2024, repeated disruptions – from pandemic-related impacts and geopolitical conflict to rising energy challenges – have accelerated a shift from short-term cost efficiency toward resilience, sovereignty, and strategic control.
In 2026, nearly three-quarters of organizations have a reindustrialization strategy in place or under development. However, despite strong strategic intent, planned investments – outside highly strategic areas such as semiconductors and defense – have declined amid policy and tariff uncertainty, bleak economic climate, and tighter capital allocation.
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The research draws on a survey of more than 1,200 senior executives across 13 sectors and 11 countries in Europe and the US, complemented by in-depth executive interviews.
Key findings include:
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European organizations are more inclined toward friendshoring [relocating part of the manufacturing/production/supplier base/service providers to countries that are geopolitical or trade allies of the organization's home country], with 64% using this approach. This preference is driven by elevated energy prices, higher labor costs, modest productivity growth, and complex, fragmented regulatory requirements within their domestic markets.
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Among non‑domestic locations, India, Vietnam, Mexico, and Canada are the top reindustrialization destinations. For example, 82% of surveyed organizations are either planning to expand or maintain investments in India. Most organizations are taking a pragmatic approach to China by rebalancing operations rather than exiting abruptly.
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Although 64% of organizations are maintaining or increasing investments in China (including for local/regional/global supply chains), organizations are strategically rebalancing operations with China depending on destination markets, and exploring different collaboration models to leverage scale, cost advantages, and innovation, while mitigating risk exposure. Also, the strategies vary by industry—for example, A&D prioritizes security and IP protection, while electronics and consumer goods pursue “China‑plus‑one” strategies.
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Technology, especially AI, act as a catalyst for reindustrialization. AI (including generative and agentic AI), automation, robotics, digital twins, Industrial Internet of Things (IIoT), and edge computing can help tackle labor shortages and improve productivity, but also reduce time‑to‑market, enable flexible production lines, boost quality, and improve resilience. Production planning, supply‑chain risk modeling/scenario modeling, and workforce optimization are some of the high‑impact use cases of agentic AI in manufacturing.
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Organizations are setting up tech‑intensive greenfield factories in semiconductors, electronics, and electric vehicles (EVs). However, a shortage of skilled industrial and digital talent is a significant constraint on scaling reindustrialization.
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