For years, we saw U.S. manufacturing move overseas, chasing cheaper labor and lower costs. It made sense at the time—why wouldn’t companies go where they could manufacture goods for less? But now, we’re seeing some of that manufacturing come back, especially in the automotive industry.
This shift toward onshoring isn’t just about nostalgia for the good old days of American manufacturing. It’s about building resilience into our supply chains, reducing our dependence on foreign sources, and yes, bringing jobs back home.
Why Offshoring Happened
Labor laws vary by country and the result is often cheaper products—that’s how offshoring allowed U.S. companies to sell more goods.
As offshoring took hold, the U.S. economy moved from being manufacturing-based to consumption-based. When we bought more, companies profited more. On the surface, it looked like a win-win. But we hollowed out a huge part of our economy in the process.
Now, not everything will come back. There are some industries—such as clothing manufacturing—where the economics of onshoring just don’t make sense. Most people don’t want to pay $50 for a T-shirt when they can get one for $10. But in other sectors, like automotive, we’re seeing significant movement toward bringing manufacturing back to the U.S., or at least or closer to home.
Why Onshoring Is Picking Up
Automotive manufacturing is leading the charge here, and it’s not about being “American Made.” A 2023 report by NewMark found $400 billion in advanced manufacturing investments pledged to create a minimum of 250 million square feet of new industrial projects by 2030. The same report estimates over 210,000 jobs being created in the same period.
But this isn’t a new trend. BMW began constructing its largest global factory in South Carolina over 30 years ago. Today, its South Carolina factory is the largest automotive exporter by value in the U.S. Why? Because the company recognized that having production closer to the consumer makes financial sense. And they made a brave investment in infrastructure.
In light of the change from NAFTA to USMCA in 2020, we’re also seeing a lot of nearshoring—where companies move their manufacturing to places like Mexico. Labor costs are lower and tariffs are nonexistent for products meeting USMCA’s requirements. Being geographically closer to the U.S. also means companies can be more agile in their production. Tesla is among the latest to join with their announcement to build a factory in Mexico less than 140 miles from the U.S. border. It’s a win for everyone involved—more goods are produced at lower costs, and the supply chain is much more manageable.
We saw the effects of a semiconductor chip shortage during COVID—industries from automotive to consumer electronics were brought to a standstill. When everything’s made overseas, you’re at the mercy of shipping delays, port backlogs and a host of other logistics issues when it comes time to distribute.
Onshoring and nearshoring give companies the ability to scale production up or down more easily and reduce the need to carry excess inventory. Plus, it improves quality control. If something goes wrong in the manufacturing process, it’s easier to catch and fix when the factory is a short flight away and not halfway around the world.
The Impact Of Resurgence U.S. Economy
Bringing manufacturing back isn’t just about reducing dependence on foreign sources, it’s also about creating jobs and boosting our economy. Every time a company decides to open or expand a manufacturing facility in the U.S., it creates a ripple effect across industries. It’s not just about the factory jobs. It’s the construction workers who build the facilities, the truck drivers who move the goods and the supply chain professionals analyzing the whole system.
But it’s not just traditional manufacturing jobs that benefit. The demand for industrial real estate is growing as companies need more space to store and distribute products. This is good for the economy, plain and simple.
Automation And The Future Of U.S. Manufacturing
Onshoring isn’t a simple return to the past. The future of U.S. manufacturing is going to look very different, largely because of automation. Companies are already using AI and automation to offset labor costs, and that’s only going to increase. We’ve seen it in fast food, where kiosks are replacing workers in some locations. The same thing is happening in manufacturing.
The bottom line is, companies are always going to look for ways to stay profitable. If labor costs go up as a result of onshoring or nearshoring, they’ll find ways to automate more of the process. That’s just the reality. But even with automation, the return of manufacturing to the U.S. will create a lot of jobs across sectors from high-skill tech roles to more traditional blue-collar work.
At the same time, this shift is having a significant impact on real estate. The cost of manufacturing facilities to house and distribute goods is skyrocketing as more companies in the computer electronics space invest in domestic production. The recent reports of hundreds of millions of square feet in new industrial projects by 2030 aren’t just about factories. It’s the combination of warehousing, logistics hubs and infrastructure needed to create a more localized supply chain for an increasingly technological world. The resulting rise in demand will create countless new opportunities for the industrial real estate industry.
The resurgence of U.S. manufacturing is real, and it’s already happening. We’re seeing companies rethink their global supply chains and invest in domestic production again. This shift isn’t just about bringing jobs back, it’s about creating a more resilient economy that can better withstand global disruptions. It’s not going to happen overnight, but there’s no question that the trend toward onshoring is a positive one for the U.S. economy.
The opportunities are there, and companies that invest in bringing manufacturing back home—or closer to home—are positioning themselves to be more competitive in the long run.
The Resurgence Of U.S. Manufacturing: Onshoring And Nearshoring Trends (forbes.com)