Reindustrialisation intent has never been higher.
Committed capital has almost halved.
That divergence is the whole opportunity, and most of the commentary has missed it.
The Gap Between Intent and Capital
The Capgemini Research Institute’s 2026 study, drawn from more than 1,200 senior executives at organisations above $1 billion in revenue, found that nearly three-quarters of large European and US companies now have a reindustrialisation strategy in place or in development, up from 59% in 2024. Over the same period, planned three-year investment fell from $4.7 trillion to $2.5 trillion.
The reflex reading is that the theme is deflating. We read it differently.
A board that has committed to supply chain resilience but no longer has the balance sheet to build it has not abandoned the commitment. It has changed the delivery mechanism. Capability that cannot be constructed must be bought, partnered for, or contracted out. Each of those routes runs directly through the mid-market — through the specialist engineering firms, industrial service providers and technical suppliers that already hold the certifications, the installed base and the skilled people.
Reindustrialisation is not becoming smaller. It is becoming somebody else’s revenue.
The Construction Number Is the Wrong Number
US manufacturing construction spending averaged roughly $75.5 billion in 2021 and reached $235.6 billion by 2024, according to US Census Bureau data. It has since cooled to around $190 billion on a seasonally adjusted annual basis — some 20% below the peak, and still around two and a half times the 2021 rate.
Read alone, the decline looks like a theme running out of road. It is the wrong number to read.
Construction spending measures concrete and steel. It does not measure what happens once the building is finished. Every facility added over the past four years must be fitted out, automated, powered, connected, calibrated, certified, maintained and supplied — indefinitely. That expenditure is recurring, and much of it begins precisely when the construction line goes quiet.
Selectivity matters here. Power equipment, thermal management, automation and controls are already attracting the market’s most aggressive multiples. Those segments are correctly identified and fully priced. Paying a premium for a consensus view of a structural theme is not a strategy.
The unpriced layer sits one step down: the businesses that specify, install, integrate, certify and maintain that equipment across an installed base they already own the relationship with. Certification barriers measured in years. Aftermarket pull-through. Customers with no tolerance for failure. Revenue that is indifferent to which specific factory gets built.
That last point is the discipline. The strongest position in a capital cycle is not predicting which projects proceed. It is owning the business that gets paid across all of them.
Defence: The Most Durable Leg
Defence is the one part of this story where demand visibility is measured in decades.
NATO allies have committed to raising defence investment to 5% of GDP. In 2025, European allies and Canada increased expenditure by close to 20% year-on-year, and for the first time every ally reported spending at or above 2%. Germany’s budget is projected to rise from €95 billion in 2025 to €162 billion by 2029. The Kiel Institute estimates European NATO members could be spending an additional €831 billion annually by 2035.
Now consider who builds it. The European defence industry turned over €183.4 billion in 2024 and employs 633,000 people. It also contains more than 2,500 SMEs embedded in its supply chains.
That single statistic is the thesis. Sovereign counterparties, contracted demand, regulatory and technical barriers to entry — sitting on a supplier base that is overwhelmingly sub-scale, frequently family-owned and institutionally under-built. The binding constraint in European defence is not demand. It is capacity, and capacity is a capital and governance problem.
Two honest caveats. Programme timing routinely slips, and an order book is not converted cash. And ownership of defence assets is subject to national security screening across the US, UK and EU — a real constraint that belongs in the deal structure at the outset, not at signing.
The Money Has Crowded to the Top
The most revealing data in this theme is not about factories. It is about who is buying them.
Industrial manufacturing M&A reached a record $173 billion over the past twelve months, a 28% increase on the prior year, according to PwC. Beneath that headline sit two structural facts: transactions above $5 billion now account for 56% of total deal value, up from 18% two years ago, and strategic acquirers represent 86% of deal value.
Read that as a competitive map, not a scoreboard. Capital, competition and price discovery have concentrated at the top. Excluding mega-deals, the average transaction is $169 million — a different market, a different buyer set, materially less tension. Lower mid-market industrial platforms have typically cleared around 6 to 9 times adjusted EBITDA, while comparable assets at scale transact closer to 11 to 13 times.
That spread is not free money. It is compensation for genuine deficiencies: single-site concentration, founder dependency, absent succession, thin reporting, project-based revenue, no functioning board.
Every item on that list is an institutional gap rather than an industrial one. The engineering is frequently excellent. What is missing is the apparatus of a professional company — and closing that gap is the most repeatable value-creation exercise available in this theme. It does not require the theme to stay fashionable.
What We Do Not Underwrite
Energy relief in Europe is temporary rather than structural: Germany’s industrial electricity price, approved in April 2026, runs only to 2028. Skilled labour shortages are limiting the ability to staff capacity that has already been built. Policy and tariff settings are reversible.
As Jamal Khan, Founder and Chairman of Churchill Partners, puts it:
“A subsidy is not a moat. If a business only clears its cost of capital because of a three-year electricity scheme or a procurement preference, we are not underwriting an industrial asset — we are underwriting a political cycle. The businesses worth owning are the ones still earning their position the day the support is withdrawn. That is where patient capital compounds.”
Reindustrialisation rewards capital that can wait. Certification cycles run for years. Defence programmes run for decades. Installed bases compound quietly. None of that fits a five-year fund clock, which is why Churchill Partners operates without a predefined exit timetable and installs experienced board oversight from day one.
The Cycle After the Announcement
The reindustrialisation story has already moved through its loudest phase. The ribbon-cuttings have happened. The construction data has rolled over. The consensus segments are priced.
What has not happened is the operating cycle — the twenty years in which everything built must be run, maintained, upgraded, staffed and supplied, and in which the businesses doing that work are still, for the most part, owned by the families and founders who built them.
The West has decided to make things again. The more useful question for an investor is not whether that decision holds.
It is who owns the businesses that get paid either way.
