An Effect of the COVID-19 Pandemic: Renewed Interest in Domestic Manufacturing

As the US continues to deal with the effects of the COVID-19 pandemic, one effect is renewed interest in examining supply chains, in some cases expanding the US manufacturing base and in other cases diversifying the supply chain rather than counting on a single or limited number of source locations. The White House has even gone on record stating that any future stimulus must invest in creating manufacturing jobs in the US.

While there has been an emphasis on such industries as personal protective gear, the fact of the matter is that a wide range of manufacturing industries are interested in reshoring production in the US. For instance, a number of companies in the building and construction industry are equally interested in seeing more US firms doing manufacturing locally rather than globally. The advantages of this shift would include:

• minimized risk of supply dislocations – more firms operating closer to US customers would boost market responsiveness
• local economic growth – US manufacturing firms tend to offer high wages, which would enhance the purchasing power of US consumers
• continued development of natural resources – US energy costs, supported by rising use of low-cost natural gas and solar power, can allow domestic manufacturers to spend more on production or technical development

At the same time, rising wages in many parts of Asia, coupled with increasing automation in US factories, is making reshoring a more cost efficient proposal for certain industries.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, including an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.