Companies are investing billions to expand their manufacturing capabilities in the US.
- American companies are moving manufacturing back to the US from Asia.
- General Motors, GE, Intel and US Steel are among companies opening new factories in America.
- Companies started reviewing their supply chains following the US-China trade war and pandemic.
American manufacturers are increasingly bringing production back to the US to reduce their reliance on global supply chains that proved vulnerable to disruption such as the pandemic.
An overwhelming majority of American companies with production operations in China have already moved some back to the US or plan to do so in the next three years, according to Kearney’s 2021 Reshoring Index.
Almost four in five corporations companies have already shifted production to the US and at least 15% are considering it due to high tariffs and ongoing supply chain challenges, Kearney’s report shows.
However, imports from low-cost Asian countries to the US still increased last year.
“Reshoring” manufacturing has also been spurred by geopolitical disruption triggered by the Russia-Ukraine war.
General Motors announced in January it would spend $7 billion on four plants in Michigan. Last year it spent almost $40 billion buying parts from some 5,600 US suppliers.
The manufacturer behind Chevrolet, GMC, Cadillac, and Hummer announced its biggest investment to increase its battery cell production to achieve its aim of becoming North America’s biggest electric vehicle producer.
GE Appliances is also investing on expanding US production to make products closer to customers and create more American jobs.
The company, which produces appliances like refrigerators, dishwashers and hot water heaters, has invested more than $2 billion in its US plants and distribution centers since 2016.
It opened a water heater plant in May in Camden, South Carolina and has increased its spend on US suppliers by two thirds in the past five years.
Intel is investing $12 billion on two chip factories near Phoenix that are due to open in 2024. The company said last year that the US has “lost ground” in manufacturing semiconductors.
The new US plants will help meet domestic demand for the billions of chips now used in a array of products from computers to cars.
US Steel is investing in a $3 billion steelmaking factory in Osceola, Arkansas. Similarly, Nucor is spending about $2.7 billion on a steel plate mill in Brandberg, Kentucky with construction set to start later this year.
Generac Power Systems moved some production from China to the US after the pandemic. Last year it unveiled plans to open a new plant in Trenton, South Carolina.
Lockheed Martin is putting $16.5 million into a new Missile System Integration Lab facility in Huntsville, Alabama. The defense contractor already has 25 facilities in Alabama and expects to create a further 200 jobs there.
US companies started reconsidering having their supply chains abroad after a trade war with China resulted in high tariffs on Chinese imports.
The Trump administration pushed for “America First” trade and called to bring jobs back to the US as the trade war began in 2018.
Manufacturers told US trade officials in June 2019 that increasing tariffs on Chinese imports would increase costs for consumers and put jobs at risk. Two months later, Trump told businesses that they should “immediately” look for alternative manufacturers to China “including bringing your companies home”.