After decades of reduced output, United States manufacturing has experienced a resurgence since 2020. The rejuvenation can be attributed to several factors.
First, global trade disruption resulting from the pandemic has encouraged many U.S. companies to strengthen their supply chains at home—an agile supply chain is a prerequisite for success. Domestic manufacturing will grow in importance as a result of this push for increased geographic diversity, simplified logistics, and reduced risk.
Second, the U.S. government has implemented several policies that have benefited the manufacturing sector. These include tariffs on imports, tax incentives for businesses that invest in domestic production and clean energy, and financial support for U.S.-based companies. Chief among these is the Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act, which is the keystone of the Biden Administration’s industrial policy moving forward. The law, passed last summer, has primed domestic manufacturing for growth, even in the face of mounting economic headwinds.
The CHIPS Act, which authorized $280 billion in subsidies, is designed to support U.S. primacy in cutting-edge fields such as artificial intelligence, robotics, quantum computing, and biomedical research. More than $50 billion of those funds are going to bolster stateside semiconductor manufacturing and research, while other funds will be used to build innovation hubs and workforce development programs to help fill jobs.
Thus far, the impact of the CHIPS Act is tough to quantify, simply because the federal government hasn’t distributed any grants yet. However, in anticipation of the coming boom, private investment has flooded into the semiconductor industry. According to the Semiconductor Industry Association, 40 new projects and $200 billion in investments have been announced to build new and expand existing semiconductor manufacturing and supplier facilities.
Finally, increasing consumer demand for U.S.-made products has further driven the growth of the manufacturing sector. Consumers have become more aware of the importance of buying locally produced goods. And customer expectations for those products are rising. According to Fictiv’s 2022 State of Manufacturing report, customer demands are shifting: They want more sustainable, higher-quality products with more advanced features and functionality. As a result, manufacturers need to be more efficient.
While domestic manufacturing is expected to continue to grow, there’s more to do if we really want to make the U.S. a manufacturing powerhouse. We’re in the midst of an economic downturn, and for the industry to have sustained success in a competitive global environment, investment in cutting-edge fields shouldn’t be the only lever the government pulls.
We also need to invest in existing manufacturers to help them modernize operations and become more efficient. That means incentivizing and providing support for production facilities of every size to digitize their day-to-day operations. Whether it’s implementing a document managing system, digitizing tooling inventory, production planning, or materials movement, modernizing operations eliminates waste and inefficiencies—and enables companies to quickly meet customer demands while increasing profit margins.
The U.S. is on its way to becoming a manufacturing powerhouse again, but the White House can do even more by pushing the industry to digitize operations. Doing so will help us produce more high-quality products faster—they’ll be more affordable, too—and that’s how U.S. manufacturing wins on the global stage.
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