Rebuilding Manufacturing in the U.S.

After decades of offshoring, fragile global supply chains and margin pressure, U.S. manufacturing, mining and construction are entering a decisive new growth cycle. Tariffs, sweeping policy changes under the One Big Beautiful Bill, heightened geopolitical risk, and the accelerating impact of artificial intelligence, is leading companies to rethink where and how they build their products and serve their customers. Domestic investments, along with new agreements with allies and tariff negotiations, put a renewed focus on supply chain control and technologies that enable production at unprecedented scale are reshaping the industrial landscape. For manufacturers and industrial leaders, this moment represents not just a rebound, but the potential for a structural reset with long-term implications for competitiveness, resilience, and growth.

Manufacturing, mining & construction on upswing

As tariffs, the One Big Beautiful Bill (OBBB) and new economic policies go into effect, manufacturing, mining and construction industries are projected to be on an upswing. Since China entered the World Trade Organization, the United States’ share of global manufacturing declined rapidly, depleting its capabilities and capacities, and so dramatic change was required to impact that trendline and its impacts on supporting industries. Add artificial intelligence (AI) into the mix, and it further spurred the potential upswing in manufacturing, mining and construction. These industries are poised for aggressive growth.

Geopolitical risks heightened awareness

For decades, manufacturing declined, imports increased, and business soared with the focus on reducing labor costs. Amazon-like service became the focus. The pandemic changed the world as geopolitical risk entered the spotlight. Relying on China for the medical and pharmaceutical supply chain and products in general was highlighted as shortages and extended lead times persisted, container ships lined up on the West Coast, and executives realized they were dependent on their end-to-end supply chain.   

Russia invaded Ukraine, Iran-backed Hamas attacked Israel and China threatened Taiwan, creating unrest throughout the world and illustrating the risks associated with global supply chains. Major supply chain chokepoints were impacted such as the Suez Canal as Iran-backed Houthi rebels attacked ships, cutting off a major waterway connecting Asia to Europe and America. In addition, the drought in Panama caused another supply chain chokepoint, the Panama Canal, to create disruption in the supply chain, severely limiting this access from Asia to the East Coast of the United States.

Tariffs enter the scene

The Trump administration responded to this world situation with widespread tariffs. The markets dropped with worries over inflation and negative impacts on business profits. Companies have been relying on inexpensive foreign goods, often subsidized within the end-to-end supply chain, so it sent shockwaves throughout the system. Following this market downturn, U.S. trade representatives and leaders worked to negotiate more favorable trade agreements with countries such as the UK, Europe, Japan, South Korea, and other Asian countries, completely reshaping the global supply chain.

Tariffs have highlighted the good and bad of end-to-end supply chains. China responded with additional tariffs levied on the U.S., which caused escalating tariffs on both sides, and effectively shutting down trade while creating concern within global logistics circles. Although a temporary de-escalation and partial deal was negotiated, it highlighted the impact of reliance on global supply chains for critical products. Additionally, during this turbulent time as tariffs were rolled out, China cut off access to rare earth minerals for the world, highlighting the critical importance of controlling the end-to-end supply chain. Rare earth minerals are required for thousands of products in defense manufacturing, automotive, electronics, medical devices and shipbuilding supply chains. And, as the name implies, they are in limited supply so having access to them is imperative for the continued production of thousands of parts and products the world relies upon in industry and in life in general. Again, this situation spurred executives to rethink their supply chain partners for these critical materials.

In addition to illustrating global dependencies, tariffs created business uncertainty as executives were unsure about changes that would impact their situation. Customers held back on orders and investments until stability returned. Since U.S. industrial manufacturing in many sectors has been in a decline since late 2022, this shrinking of backlogs caused further tightening among manufacturers and their customers. Demand shrunk and manufacturers put all non-essential spending on hold, keeping the sector on the edge of recession.

On the other hand, as the U.S. negotiated tariffs with countries, stability slowly returned. In addition, new deals opened markets for key industries such as aerospace, energy and farming. For example, Qatar purchased 210 widebody jets and the European Union agreed to purchase significant liquified natural gas (LNG), oil and nuclear fuel. In addition, new opportunities emerged for manufacturing, mining and construction as companies and countries started announcing significant investments into the U.S. economy. For example, Japan agreed to invest $550 billion in U.S. industries, including energy, critical minerals, AI and electronics, as part of a major trade deal. Similarly, South Korea is investing in shipbuilding as they have superior capabilities in that sector. In addition, significant pharmaceutical expansions were announced by companies including Eli Lilly, Johnson & Johnson and Roche, driving new domestic production and R&D.

Further expansion with OBBB & artificial intelligence

Closely following the tariffs, Congress passed the OBBB with significant incentives for manufacturers. Not only did it make the favorable tax rate permanent, it allowed for depreciation of equipment and buildings, as well as other tax benefits for manufacturers including in R&D spending. These benefits, in conjunction with tariffs, are creating a wave of investments and expansions into manufacturing, mining and construction.

Going a step further, as the race for AI heats up, investments in data centers, energy infrastructure and critical minerals are escalating. Depending on which estimates to cite, there is somewhere between $8-20 trillion dollars of investments in these areas planned over the next decade. Even if you cut the low end by 50%, these are substantial investments which will spur a rapid expansion and need for additional capacities, capabilities and supporting infrastructure.

AI also is integral to the expansion of manufacturing as it supports building at scale. Labor costs are far less relevant to the total cost of products as advancements in AI, automation and robotics can reduce the need for low-skilled labor in some areas. More importantly, AI supports production and building at scale by enabling a significant increase in output rapidly. When transitioning from minimal output to radically more output, continuous improvement will not suffice. AI and advanced technologies have become a must.

Proactive approach for success in scaling production

As manufacturing, mining and construction scales up, the companies that will succeed the most and the fastest are taking the proactive approach with predictive processes, upgraded tools and advanced technologies. For example, SIOP (Sales Inventory Operations Planning) enables executives to stay ahead of changing business conditions, potential geopolitical threats and roadblocks to maximizing margins in a way that creates predictable revenue, superior customer performance, EBITDA growth and working capital strength. Simultaneously, more efficient use of ERP with upgrades of programs such as materials requirement planning (MRP), inventory optimization and the rollout of advanced technologies that enhance supply chain visibility with tools such as geofencing and crowdsourcing. Advanced planning systems such as CRM (customer relationship management), sales forecasting, APS (advanced planning and scheduling), TMS (transportation management), and related technologies such as digital twins, autonomous vehicles, and robotics can also dramatically increase capabilities.

The bottom line

As global supply chains evolve, the companies that thrive are staying ahead of changing conditions with an innovative and forward-thinking perspective. There will be more opportunities in the next few years than at any time in history for those willing to take prudent risks and prepare for growth while keeping costs intact. Success will go beyond common sense, continuous improvement, historical perspective; instead, it will go to those willing to leap forward with AI-enabled processes and related technologies, hoarding top talent while building the future workforce, and those willing to fail and learn forward.

Source: Lisa Anderson

Lisa is founder and president of LMA Consulting Group, Inc., a consulting firm that specializes in manufacturing strategy and end-to-end supply chain transformation that maximizes the customer experience and enables profitable, scalable, dramatic business growth. She recently released SIOP (Sales Inventory Operations Planning): Creating Predictable Revenue & EBITDA Growth that can be found at https://www.lma-consultinggroup.com/siop-book/.