Why Manufacturing Might Return to the U.S.

The nation’s supply chains have been vulnerable for several years now. Even before the pandemic, problems ranged from international trade disputes to extreme weather to the rise in automation.

Merrill Lynch recently found that up to 80% of U.S. companies in 12 different industries are rethinking their supply chains, including considering shifting labor from China to other places such as Southeast Asia and India to reduce labor costs. More surprising, though, is that many businesses also are assessing the feasibility of returning supply chain manufacturing to the U.S. While that is good news on some fronts, it won’t necessarily lead to more jobs. In fact, almost all industries are looking to take advantage of robots and automation as those costs continue to fall.1

Reshoring offers the potential for the following benefits:2

  • New jobs for highly skilled workers trained in robots and automation
  • Higher wages for new types of manufacturing jobs
  • Every $1 in manufactured goods produces $1.33 in output in other industries
  • Each new job in manufacturing creates six new jobs in other sectors (e.g., distribution, transportation, retail)
  • A boost to innovation, as manufacturing industries spend an average 5.5% of domestic sales on research and development

1 Merrill Lynch. March 16, 2020. “Tectonic Shifts in Global Supply Chains.” Accessed August 10, 2020.

2 Ibid.