This article was originally written for and published by Forbes.
The American economy is at a critical juncture with a mix of daunting challenges and promising opportunities.
Almost daily we are faced with negative headlines reporting high interest rates and continued concern about a potential recession. And as the presidential election draws nearer, pundits are expressing uncertainty about how the next President elect will impact economic policy. While many of us are waiting for the Fed to begin to lower interest rates, Washington lawmakers are hard at work to combat the systemic challenges in our economy, but many U.S. business leaders are leery of the progress they are making.
Despite these concerns, there are bright spots in the overall landscape. U.S. economic growth is showing a strong pace and the stock market is soaring to new highs. However, this current situation is not going to be a rising tide that lifts all boats. There is going to be choppiness. There are going to be losers. But companies that take action today will be the winners and emerge victorious.
Amidst all this uncertainty, it’s an exciting time to be in manufacturing, especially here in North America. We are seeing a manufacturing Renaissance. It is booming, and there is a long runway ahead of us.
Recent dialogue from lawmakers in Washington has emphasized the important link between economic prosperity and U.S. economic independence. The resurgence in American manufacturing is being driven by significant government stimulus to incentivize manufacturing and engineering capacity in the U.S.
The government has allocated over 1 trillion dollars through a number of bills and programs, such as the CHIPS and Science Act and the Inflation Reduction Act. Both of these are focusing on increasing durable economic activity, including expanding domestic manufacturing. These investments have produced a 150% increase in construction spending for new factories that funded 50 different semiconductor projects and injected over $20 billion in manufacturing capacity for domestic battery production. This is a massive investment in manufacturing that underscores America’s commitment to hedge against geopolitical risks and uncertainties.
Western democracies must be mindful of this link between political policy and economic security. We must ensure that our supply chains are anchored in reliable regions where we are protected from adversities.
Economic security begins with the U.S. supply chain returning to domestic manufacturing. It’s time for American manufacturers to relocate their capacity and focus their efforts on bringing manufacturing back home or to countries that share our values and commitment to fair business practices. Decoupling from outsourcing will allow American manufacturers to seize new opportunities and position themselves for long term economic security.
So, where should American companies begin?
Taking The Right Path
Corporations can start this process by looking internally at their operations to identify just how reliant they are on their overseas supply chain. Are there current areas of the supply chain where operations can be brought back to the U.S.? Are there alternative sources for materials, or a new way to produce parts that are less reliant on outsourcing? Once companies identify areas where these adjustments can be made, the process toward decoupling can begin.
Still, the path toward distancing from outsourcing manufacturing is not without potential setbacks and challenges. For those who don’t have a clear line of sight into their supply chain, additional technology investments may be needed to gain a complete, holistic picture. This shift will not only take time and money but could also require companies to re-skill their workforce for the pending adjustment. However, it’s a price that’s worth paying.
Companies are waking up to these risks and are beginning to make shifts in their processes. More and more modern manufacturers are moving capacity to domestic facilities, and the effects are starting. American manufacturers are starting to move operations to North America.
The American economy may be at a crossroads, but the path forward is filled with potential. By addressing concerns with the global supply chain with focus and purpose, American manufacturing will see a resurgence and welcome a new era of growth and innovation.
Ross Meyercord is a member of the Forbes Technology Council, an invitation-only community for world-class CIOs, CTOs and technology executives. Check out all of Ross' content for Forbes here.
