For years, we’ve been hearing that US manufacturing is making a comeback. But talk of reshoring, investing in existing plants, and building new plants on American soil has seemed like just that– lots of talk, little action. This may finally be changing. New government policies including tax reform and promised infrastructure investments, combined with reshoring benefits and strong consumer confidence, are generating renewed optimism in the future of US manufacturing.

According to the NAM Manufacturers’ Outlook Survey Fourth Quarter 2017, 94.6 percent of respondents are optimistic about their own company’s prospects, and more than half (58.7 percent) said the US economy is headed in the right direction. Whether or not manufacturing levels will reach pre-2008 levels is still up for debate, but industry experts predict slow and steady growth in the coming months.

These are three factors driving the resurgence:

  1. New tax law boosts US manufacturing investments and enables critical digitization upgrades.
    The recently passed tax reform bill, which lowered the US corporate tax rate from 35 percent to 21 percent, may drive much-needed capital investments for the manufacturing industry. Manufacturers can invest their tax savings in new research and development, increased inventory, and equipment upgrades. Investments in new digital technologies, like digital automation and co-bots, are streamlining operations and increase efficiency. These advancements don’t replace workers but instead make their jobs easier and safer, saving time and money that can be reinvested in continued operational improvements.
  2. Supply chain advancements increase reshoring.
    Offshoring downsides like shipping delays, lesser-quality goods, and rising transportation costs are all contributing to the view that manufacturing in the US may be more cost-effective. In addition to the marketing benefits of proudly display “Made in America” labels, reshoring also helps companies streamline supply chain logistics and improve the customer experience. Manufacturers are investing in road and air-based transportation, bringing items to customers faster to meet the ever-growing demand for two-day fulfillment.
  3. Consumer confidence hits record levels.
    Despite the recent market volatility, consumer confidence remains strong, increasing in February to its highest level since 2000. As more companies expand their operations and hire new employees, consumers are earning more and spending more, driving stronger product demand. Strong consumer spending also allows manufacturers to confidently introduce new products to the marketplace.

One potential wildcard in America’s manufacturing resurgence is the recent tariffs on imported aluminum and steel. Tariffs of 25 percent have been placed on steel and 10 percent on aluminum imported into the US, excluding some countries. The tariffs are designed to benefit the raw metal industries, although manufacturers of steel goods may have to pay a higher price for their raw materials. As of early April, research suggests that the tariffs may ultimately add 19,000 steel and aluminum jobs

We can’t know for certain where manufacturing will be in 12 months, but all signs point to a steady resurgence– and continued demand for strong manufacturing leadership. Experienced problem solvers and team leaders will play a critical role in IoT investments, supply chain logistics, and reshoring.