Nearshoring is underway at scale, driven by the threat of new tariffs and ongoing supply chain concerns due to the risk of war, climate change and boycotts.
Britain’s economy is set to benefit from $650billion in re-industrialisation over the next three years.
More than 1,400 executives from large scale organisations were surveyed by Capgemini. Responses revealed widespread agreement that processes of diversification and and nearshoring were underway in a bid to overcome the threat of trade tariffs and supply chain challenges. This represents a significant increase on the last projection of $430billion in 2024.
More than one-quarter of executives were found to be in or starting a process of bringing supply chains closer to home, which is much higher than the 13% recorded last year but far behind a similar survey in the US which found 37% of American firms were engaged in this activity.
Meanwhile, 74% of British firms believe ‘friendshoring’ – sourcing products from countries considered geopolitical allies – is becoming far more important. 38% of manufacturing capacity could be accounted for by friendshoring by 2028.
Supply chain resilience was considered the top factor driving these changes, with geopolitical concerns also a significant issue alongside the desire to be closer to customers.
Donald Trump is expected to announce new tariffs this week, adding further fuel to an escalating global trade war. New levies will impact the UK, with industries affected likely to include car manufacturing and pharmaceuticals.
The US is the UK’s largest export market, with Britain selling £6.4billion of vehicles to the North American giant and £8.8billion in medicines and other drugs during 2024 alone. Overall, just over 16% of British exports are bound for the United States.
Image: Rob Lambert / Unsplash
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