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The U.S. is witnessing a manufacturing renaissance, with companies building new facilities at a record pace not seen in decades. Spending on new manufacturing construction rose to an annual rate of $114.7 billion in 2022, a staggering 40% increase year-over-year, and a 62% increase over the past five years, according to the U.S. Census Bureau.
This reshoring trend is driven by several factors, including the CHIPS and Science Act, rising labor and transportation costs, U.S. tariffs on China, geopolitical tensions, and a desire to reduce single-source dependency and enhance supply chain resilience.
A recent report on global chip supply chains projects the U.S. will triple its domestic semiconductor manufacturing capacity between 2022 and 2032. However, as many companies are learning, reshoring manufacturing to the U.S. doesn’t come without challenges.
The automotive, semiconductor, high-tech, and aerospace and defense industries are at the forefront of this reshoring wave. The U.S. semiconductor market in aerospace and defense, for example, is expected to reach $7.93 billion in 2024. Major players like Intel, NVIDIA, Samsung, and Micron Technology are expanding their footprint in the U.S.
While reshoring manufacturing back to the U.S. can bring a host of benefits, such as shorter supply chains, increased national security, improved quality control, and economic and job growth, it doesn’t come without significant hurdles. Following are five major challenges facing U.S. manufacturing.
