US Manufacturing Expansion Trends

As manufacturers navigate tariff uncertainty, experts on a panel at the Medical Design & Manufacturing East expo in New York City on May 22 said it’s important to keep a level head and make rational decisions about business operations and relationships.

Andreas Haag, CEO at Streamliners Management Consulting, said his role recently has “turned to being the therapist of senior leaderships,” with clients feeling more anxious or hesitant about decision-making due to tariffs.

Global makers of drugs, microchips, cars and more have responded to the Trump administration's trade policy with pledges to invest or relocate their production to the United States to avoid higher taxes on goods and services. However, the panelists said not everyone should make the same move.

Shay Luo, a partner at management consulting firm Kearney, said companies should consider factors like demand, location and cost before upheaving or expanding their production.

“We have to keep reminding people, like, be rational. Do not be emotional on this topic,” Luo said.

Manage and maintain supplier relationships

Tensions between the U.S. and China have resulted in a rollercoaster of tariffs, with rates varying between 10% to 145% in recent months.

At their peak, the reciprocal taxes tanked U.S. stock markets and created uncertainty around how tariffs would impact prices and consumer demand. They have since been lowered to an effective 30% rate for Chinese imports and 10% for U.S. exports as part of a 90-day pause between the two countries.

With rates as volatile as they are, Haag recommended manufacturers keep their supplier relationships in place in China. At some point, he said, the tariffs will be lifted and companies that pivoted to the U.S. will be in a race to re-establish their former suppliers.

“It's going to be survival of the fittest,” Haag said. “If you have cut off ties, you're going to be out of business.”

Luo, who works on Kearney’s annual reshoring index, a barometer that tracks job reshoring to the U.S. from Asia, has been monitoring relocation trends in manufacturing for years. Despite recent domestic manufacturing commitments from executives, this year’s report showed an overall slowdown in reshoring activity, illustrated by declines in its manufacturing import ratio, driven by supply-demand factors.

A common factor among companies who successfully make the transition is that they work with their existing suppliers rather than pivot to others, Luo said.

“You will be surprised how many of your suppliers based out of Asia are willing to work together with you to establish another factory or production line in Mexico or in the U.S.,” she said.

More policy opportunities for capital investments

One of the biggest challenges facing manufacturers looking to expand or bring production back to the U.S. is navigating the ever-evolving web of regulatory hurdles.

Matthew Wright, founder and executive chairman at Specright, a software firm focused on specification data management, said it’s hard to add production lines or construct buildings in most states and jurisdictions in a timely manner. Wright is a former packaging executive. 

“[A company] may have a great idea to bring product back to the U.S., then realize it's a two- to three-year project to get capacity up and running, and half of that is because of delays and local regulatory issues,” Wright said.

To expedite business development, Congress previously launched the Opportunity Zone program during President Donald Trump’s first term to spur economic growth by awarding companies tax benefits for investing in historically underserved or distressed areas. Wright said he wants to see the federal government do more with the program.

As part of Trump’s “One, Big, Beautiful Bill,” lawmakers are looking to pass legislation that would restructure and expand the 2017 program to include more qualifying “opportunity zones” and investment incentives.

Evaluate costs and efficiencies

As tariffs raise the cost of goods and services, many manufacturers are looking for ways to avoid passing those increases on to consumers.

Wright said leadership should re-engage their companies around a unified goal of lowering costs to drive demand during these uncertain times.

“I do think margins in general are very razor thin,” Wright said, but there is also an opportunity for companies to lower their costs through supplier negotiations or by acting on tariff mitigation “playbooks” from years ago.

Market disruption from tariffs can also yield opportunities that drive operational efficiencies within companies and workforces. “I actually think this is an unbelievable opportunity right now to really make change happen, and to make improvements that will stay much longer than the tariffs,” Haag said.

In countless comments and posts over the past several months, President Donald Trump has touted tariffs as an effective way to drive widespread investment in U.S. manufacturing.

The president has talked of how those investments will lead to massive job growth and domestic technological prowess. And even as economists have expressed concern about tariff-induced price hikes for U.S. consumers, Trump has reiterated that any short-term pain will be worth the long-term economic and industrial gains. 

"Tariffs are about making America rich again and making America great again, and it is happening, and it will happen rather quickly," the president said in a joint congressional address in March. "There will be a little disturbance, but we are OK with that.”

As the list of levies imposed by the administration continues to grow, the manufacturing industry is bracing to find out if the president's theory about the power of tariffs will prove true. 

Will tariffs really lead to widespread investment?

One of the president's frequent reasons for heightened tariffs is to incentivize manufacturers to invest in new or expanded facilities in the U.S., therefore avoiding the higher import taxes. 

And in recent weeks, major manufacturers like Hyundai and Taiwan Semiconductor Manufacturing Co. have helped support that claim, announcing hundreds of billions of dollars in new manufacturing investments. While neither company specifically tied their investments to the tariffs in their announcements, both companies unveiled their plans from the White House, where Trump, at the Hyundai rollout in March, said the money was a “a clear demonstration that tariffs very strongly work.”

Throughout the wider industry however, experts are more skeptical about whether smaller firms will take the same investment leap while trade policy remains fluid. 

The uncertainty around whether tariffs will remain in place at their current levels makes it more fraught for companies to invest in expensive facilities or supply chain overhauls, Jeremy Tancredi, partner of operations excellence and supply chain management at West Monroe, said at a recent Manufacturing Dive event.

He cautioned manufacturers against taking "drastic" measures to overhaul their supply chain until policies standardize and normalize, “and not making some of those decisions that may look good today under today’s landscape, but as it changes tomorrow, next week, next month, it doesn’t become as good a solution.”

Treasury Secretary Scott Bessent has been a vocal supporter of the Trump tariffs, saying in an April 4 interview with investment bank Jefferies that the duties could raise between $300 billion and $600 billion in revenue per year and protect domestic industries from what the administration views as unfair global practices. 

In an interview on The Tucker Carlson Show, Bessent said tariffs are the “beginning of a process” to reindustrialize the U.S. and push back against foreign economic systems like China’s, which subsidizes industry.

“If we could put on a 20% tariff, have the foreigners pay that, and use that money to bring down our government deficit and keep taxes low? That’s a very unique formula that hasn’t been tried in this country for a long time,” the secretary said. 

The administration has particularly prioritized expanding domestic semiconductor production, using tariffs to incentivize TSMC and others to invest in the U.S. The policy stands in contrast to the Biden administration’s direct funding for the industry through its landmark CHIPS and Science Act. 

Gary Clyde Hufbauer, a nonresident senior fellow at the Peterson Institute for International Economics, remains skeptical that either Biden or Trump’s approach can significantly grow U.S. production for mature and legacy chips, the larger, foundational semiconductors that the country currently imports from countries such as Taiwan, China or South Korea. 

“There will be some additional production,” Hufbauer said. “I just am skeptical the U.S. can bring the cost down to the levels of South Korea, given the wage structure here and the fact that we don't have a history in those industries for a long time.”

Hufbauer added that new semiconductor factories would take a minimum of two years to build, and could still likely lead to more expensive products. And while major firms like TSMC and Nvidia have made large-scale investment announcements, smaller manufacturers are less likely to do so while policy remains fluid.

“While those are pretty stunning announcements that the big firms have made, all the uncertainty that comes with Trump's changing tariff initiatives, the U.S. as a whole has actually depressed manufacturing investment,” Hufbauer said. “The uncertainty, for most firms, causes them to take a wait-and-see attitude.” 

Even if Trump keeps tariffs in place throughout his presidency, Hufbauer added that “it’s hard to say what the next administration will do, given the general unpopularity of the tariff.” 

Tariffs seek to turnaround a decades-long manufacturing decline

Looking beyond the current tariff policies, Robert Lawrence, an international trade professor at Harvard University, said that a deeper underlying issue is that less economic growth in advanced economies is powered by manufacturing. 

Manufacturing's contribution to U.S. gross domestic product has been steadily declining over the past two decades. In 1997, manufacturing contributed to 16% of U.S. GDP. By 2021, that number had fallen to 11%, according to the World Bank.

In Q3 2024, manufacturing contributed $2.93 trillion to the U.S. economy, roughly 10% of GDP, according to the National Institute of Standards and Technology.

There are multiple factors that contribute to the decline, including that U.S. consumers today spend less of their income on finished goods compared to decades past, Lawrence said. 

"The combination of fast productivity growth, and what people who are richer do with their money, has meant that the share of manufacturing inevitably declines over time in advanced industrial economies," Lawrence said.

Increased global trade with countries where labor is cheaper, such as China, is often said to have contributed to a decline in U.S. manufacturing, as companies established production hubs abroad and consumers followed suit, increasingly buying less expensive, foreign-made goods.

Trump has also frequently blamed the North American Free Trade Agreement, which he renegotiated as the United States-Mexico-Canada Agreement in 2020, for the decline in domestic manufacturing, calling it “the worst trade deal probably ever made.”

Are more manufacturing jobs the win Trump claims?

The president has also been vocal in his assertion that tariffs will drive not only increased investment, but job growth. 

While the U.S. did add 228,000 jobs in March, up from the revised 117,000 job increase in February, those numbers were before Trump's broad-based tariffs took effect in April. In the manufacturing industry, job growth remained relatively flat last month, adding only 1,000 jobs, according to the Bureau of Labor Statistics.

It remains to be seen if manufacturers will substantially increase hiring as a result of tariffs. Large-scale investments like TSMC's are said to come with the creation of thousands of jobs. At the same time, however, observers say unemployment overall could reach up to 4.7% by years' end, up from the current level of 4.2%, according to a CNBC report.

Further complicating the issue is that much like the size of the manufacturing economy, industry jobs have dropped steadily over the past several decades. Manufacturing employment has dropped from a high of more than 19 million jobs in 1979 to nearly 12.8 million in March 2025. 

Fewer manufacturing jobs are needed today to produce the same amount of output, making the scale of success smaller, Lawrence said. 

"If we were to eliminate the trade deficit by producing all those goods in the US, it would increase manufacturing employment by one to two percentage points. That's what success looks like," Lawrence said. 

Economic policies need to adapt to meet the current state of demand, Lawrence said, rather than focus solely on trade. 

"If you want to come up with solutions that really deal with the problems, and they are serious, of what people without college educations are earning and what left behind places that have lost manufacturing plants are doing, if you want to help them, you have to have policies specifically designed to meet the demand in the economy that is coming internally, rather than through international trade.”

Sponsored content

By TPC, a Certus Company

It’s about to get really expensive to source anything from abroad, and if you haven’t made a plan to reduce the impact on your operations yet, the next few years are going to hit your bottom line. It’s time to get to work safeguarding your company’s future. In this article, we’ll walk through some tactics that will help you weather this.

Reshoring is already happening; how are you keeping up?

According to the National Institute of Standards and Technology (NIST), reshoring will primarily benefit smaller, more nimble manufacturers as they are able to leverage localized supply chains for greater flexibility and faster turn times. And according to Kearney’s 2025 report, 15% more CEOs plan to reshore at least part of their operations by 2028.

But in light of current worker shortages, and with the understanding of how many are retiring in the coming decade, it’s critically important to be able to attract enough maintenance team members and ensure they have the necessary skills to keep your facilities in tip-top shape. Using the tactics in this article will help reduce the challenges around hiring and retaining these key workers, especially when onshoring or reshoring your workforce is necessary. If you’re already making plans like these, you’re ahead of the curve. If not, consider applying these strategies to your plans.

3 tactics for improving onshoring and reshoring efforts

It’s time to embrace new technologies designed to make your team more efficient!

1. Automation & smart manufacturing are a big way that manufacturers will be able to keep up with hiring enough technicians to maintain peak machine uptime and reduce unplanned downtime.

With the right guardrails in place, adding robotics, AI, and devices that rely on IoT (Internet of Things) streamlines your operations and reduces the need to hire massive numbers of entry level and unskilled roles. This allows manufacturers to: 

• Use predictive maintenance and similar tactics to reduce downtime and increase efficiency.
• Reduce the total workforce needed, minimizing recruitment challenges.
• In turn, allow a greater percentage of the available workforce to grow into technician and maintenance roles for better earning potential with a lower overall headcount needed for basic operations.

2. Building with scalability in mind

When building or remodeling, the scalability of your facilities matters. Build near major population centers to maximize the available workforce. Consider multiple smaller facilities, too, to preserve that workforce for:

• Faster development
• Easier recruitment
• Larger candidate pools

The alternative? A single facility that employs most of a small town carries great risk: if the manufacturer fails, it can devastate a community; on the other hand, if the community doesn’t grow at the scale the business needs, it can hinder profitability.

3. Upskilling the workforce

When automation and smart manufacturing tactics are in place, and regardless of the size or location of your facility, upskilling is the logical next step for strengthening your workforce.

According to a report by The Reshoring Initiative, an independent nonprofit founded in 2010: survey respondents indicated that if they were able to attract a highly skilled workforce, they would reshore 30% of offshored products. But that skilled, technical workforce is the keystone you can’t ignore.

Building your skilled industrial maintenance workforce starts with:

• Building apprenticeship programs in partnership with local schools and training providers
• Partnering with vocational technology schools and community colleges to build a more sustained workforce pipeline by offering internships
• Offering on-the-job training that is flexible and scalable – such as with online training and simulation-based training for optimal learning retention – so you can train those with technical aptitude when you can’t find enough experienced techs
• Looking for subscription-based training models that are easy to expand as you hire
• Finding progressive training that advances their troubleshooting skills before your maintenance team works on your expensive, potentially brand-new equipment

You’re probably well on your way to planning your reshoring efforts – but regardless where those plans sit, your current technical workforce’s success and the solvency of more expensive stateside manufacturing is going to come down to the skill of your machinists, millwrights, electricians, and other team members key to maintaining and repairing your critical machines. If you can’t hire enough or can’t hire skilled enough, training is how you get to profitability fastest.

About the sponsor

TPC provides flexible and scalable online subscription-based training for millwrights, electricians, machinists, and others who handle industrial maintenance and technical operations. Their training solutions incorporate learning and technical best practices and their simulation-based learning platform provides an immersive, gaming-like environment for learning. It’s where your team members can embrace a systematic troubleshooting approach that helps companies like yours plan downtime and save money (and spare parts). Learn more>>

The U.S. Small Business Administration announced its Made in America Manufacturing Initiative on March 10, aimed at cutting red tape and regulatory costs for manufacturers.

As part of the effort, the agency said it will cut $100 billion in regulation through the Office of Advocacy and launch a Red Tape Hotline for small business owners and manufacturers to share feedback and call out what they believe to be unnecessary regulations.

Additionally, the SBA is looking to expand financing options and make it easier for people to qualify for small business loans, including for real estate, construction and equipment purchases.

The SBA initiative is part of President Donald Trump’s agenda to create jobs and reshore manufacturing, leveraging tariffs as a tool to entice companies to invest in U.S. facilities to avoid import taxes. The president’s actions in recent weeks have rattled markets, but also pressured companies across sectors to commit to U.S. investment and expansion opportunities.

Vice President JD Vance spoke about the administration's domestic manufacturing push during a visit to a plastics manufacturing facility in Bay City, Michigan.

“We’re going to cut your taxes, we’re going to slash your regulations and we’re going to reduce the cost of energy to build things right here in this country,” Vance said during his remarks. 

He toured a Vantage Plastics plant and gave remarks about the progress Trump has made in delivering a “great American comeback” in the first two months of his second term. This was Vance’s first official visit to Michigan since before the election.

During his remarks, Vance said the country gained 10,000 manufacturing jobs during Trump’s first full month in office in February, marking a turnaround after losing an average of 10,000 manufacturing jobs per month last year.

“Our goal is to make it easier and more affordable to make things again in the United States,” Vance said. “If you invest in America, in American jobs, in American workers and in American businesses, you’re going to be rewarded.”

To accelerate the administration’s goals, the SBA said it will cut billions of dollars in regulation through the Office of Advocacy, a watchdog group that backs the interests of small businesses before Congress. The group is tasked with identifying and eliminating rules, policies and procedures that burden small businesses and manufacturers.

There are more than 600,000 small business manufacturers in the U.S., employing 4.8 million workers with an annual payroll of more than $277 billion, according to the Office of Advocacy. More than 20% of all small U.S. manufacturers deal in fabricated metal products.

In addition to regulatory cuts, the administration is looking to expand access to the SBA’s 504 loan program, which provides funding for real estate, construction and equipment purchases.

It is also expanding the use of the SBA’s 7(a) Working Capital Pilot program, which offers financing for inventory purchases and export-related expenses for international markets, according to the announcement. Both loan programs operate without taxpayer funding.

“If you want to be rewarded, build in America,” Vance said during his remarks. “If you want to be penalized, build outside of America. It’s as simple as that.”

GlobalFoundries announced plans on June 4 to invest an additional $3 billion to expand its semiconductor manufacturing and advanced packaging capabilities in Malta, New York, and Essex Junction, Vermont.

The funds will go toward research and development initiatives focused on packaging innovation, silicon photonics and new gallium nitride technologies, according to the press release.

The money builds upon the company’s previously announced $13 billion investment in the two plants, as well as its upcoming advanced packaging and testing center on its Malta campus.

GlobalFoundries has been working on diversifying its supply chain over the past few months to get ahead of a 25% semiconductor tariff threatened by Trump earlier this year. As a result, the company has been turning toward its Malta and Essex Junction facilities to supply its customers, especially in the automotive sector. 

“Semiconductors are critical to the future of vehicles, and their importance will only grow,” GM President Mark Reuss said in the June 4 press release. “GlobalFoundries’ investment supports our work to secure a reliable, U.S.-based chip supply — essential for delivering the safety, infotainment and features our customers expect.”

As customers weigh the impact of the tariffs, diversifying their supply chains is key to limiting risk exposure, then-GlobalFoundries President and CEO Thomas Caulfield said in a February earnings call. Former COO Tim Breen was named as the company’s new CEO effective April 28. 

“We need to have the ability to source from different regions,” Caulfield said. “And I think it’s just raising the height of importance of diversification and supply chain with customers.”

In November, the Department of Commerce finalized GlobalFoundries’ $1.5 billion CHIPS and Science Act funding for its New York and Vermont facilities. The company was also awarded $550 million that will go toward ongoing upgrades and expansions.

But as the Trump administration reviews the future of the law, it’s unclear whether GlobalFoundries and other awardees will still receive their finalized funding. The company did not immediately respond to a request for comment on the status of its funding. 

GlobalFoundries’ new investment addresses the “explosive growth” in AI, as the technology accelerates demand for new semiconductor capabilities and processes to power data centers, communications infrastructure and AI-enabled devices, according to the press release.

AI is especially driving demand for GlobalFoundries’ silicon photonics, GaN, and FDX technologies to power data centers, Breen said in a statement.

“The rapid rise of AI in both the cloud and at the edge is driving the adoption of new technology platforms and 3D heterogeneous integration technologies,” GlobalFoundries said in the press release. “These advanced solutions are essential to meet the exponentially growing requirements for power efficiency, bandwidth density and performance.”

The semiconductor supplier is also collaborating with major companies to reshore production to the U.S. and diversify global supply chains, including Apple, SpaceX, General Motors, AMD, Qualcomm Technologies and NXP. 

“At GlobalFoundries, we are proud to partner with pioneering technology leaders to manufacture their chips in the United States — advancing innovation while strengthening economic and supply chain resiliency,” Breen said in a statement.

GlobalFoundries additional investment comes after the Commerce Department withdrew $210 million in federal grants that were approved for six U.S. technology and manufacturing hubs, including $23 million for the Vermont Gallium Nitride Tech Hub that the company co-founded with the state and the University of Vermont. The hub focuses on developing and commercializing GaN devices and boosting the semiconductor workforce in the state.

Johnson & Johnson is planning a major U.S. expansion, announcing on March 21 it will spend $55 billion over the next four years on manufacturing, research and development and technology in its domestic market.

The investments will support three advanced manufacturing facilities and expansion of other sites in its pharmaceutical and medical technology businesses, J&J said. The company officially broke ground on a new 500,000-square-foot biologics manufacturing facility in Wilson, North Carolina.

J&J’s announcement follows splashy releases from Eli Lilly, Merck & Co. and Amgen emphasizing their investment in U.S.-based manufacturing. The companies are hoping their effort will ease the burden of tariffs as well as persuade the Trump administration to extend tax cuts enacted in his first term and soften the blow of Medicare price cuts.

J&J said the U.S. expansion plan will represent a 25% increase in its investment compared to the past four years. In its annual reports, the company said it spent around $4 billion each year between 2021 and 2024 on “additions to property, plant and equipment,” a measure that largely captures the company's capital expenditures.

The Trump administration has pushed corporations to open more facilities in the U.S., emphasizing its “America first” policies that seek to discourage imports and increase manufacturing employment.

Big pharmas say their decision to reshore manufacturing has been enabled by the Tax Cut and Jobs Act enacted in 2017 — which, in addition to cutting the base corporate rate, also lowered taxes on profits that are earned by overseas subsidiaries and paid back to the U.S. parent.

Rising demand for their products, as well as the risk of tariffs from overseas production, is driving manufacturing expansions. Lilly has struggled to meet the appetite for its GLP-1 product tirzepatide, sold as Ozempic in diabetes and Zepbound in obesity. Sales of the drug tripled between 2023 and 2024. J&J also has fast-growing biologic medicines like Darazalex and Carvykti in cancer and Tremfya in psoriasis, underscoring the need to build production facilities close to their biggest-selling markets.

J&J said the North Carolina plant will employ 5,000 people in construction and create 500 permanent positions. The remaining manufacturing sites will be announced at a later date, as will expansions of R&D facilities and “increased technology investments to help make drug discovery and development faster, support workforce training and enhance our business operations.”

Before these expansions are accounted for, J&J claims its benefit to the U.S. economy exceeds $100 billion a year.

U.S. manufacturing is in a rebuilding phase. Following decades of productivity slowdowns fueled by labor declines and globalization, companies are leveraging artificial intelligence and automation to fill in the gaps and attract the next generation of workers.

However, the vast majority of manufacturers in the small to medium-sized tier are struggling to evolve, according to academics. In Cleveland, Ohio, for example, metalworkers today are still using the same milling machines used in the 1940s, said Suzanne Berger, a political science professor at the Massachusetts Institute of Technology and co-director of the university's Initiative for New Manufacturing.

There are no robots. There are no 3D printers. Instead, metal fabricators are looking for people who can operate the equipment they have at a wage of $13 per hour, Berger said — “unless an Amazon warehouse down the street opens up, then [they’ll] have to pay $15 an hour.”

Over the past 20 years, Berger, alongside her colleagues and students, have traveled to factories around the world, interviewing manufacturers about their operations and workforces, and found that U.S. companies are not as technologically competitive as hoped, but rather stuck in a “low-end trap.”

“We have low tech, low skill, low wages, low productivity, and you can't really fix any one of these pieces without trying to really pull this 'knot' apart,” she said. “And, the question is, how do we do that?”

Recently, MIT launched its Initiative for New Manufacturing, an institute-wide effort to reinfuse U.S. industrial production with the latest technologies to bolster economic sectors and ignite job creation.

Through a mix of research, hands-on training and collaboration with corporate partners, the Cambridge, Massachusetts, university plans to build the tools and talent to shape a more productive and sustainable future for manufacturing.

“We want to work with firms big and small … in cities, and small towns, and everywhere in between … to help them adopt new approaches for increased productivity,” MIT President Sally Kornbluth said during a May 7 speech about the initiative.

The first seven consortium member companies involved with the initiative are Amgen, Autodesk, Flex, GE Vernova, PTC, Sanofi and Siemens. They will initially support seed projects related to AI in manufacturing, with plans to expand into other topics, according to a news release. Each company has agreed to provide $1.5 million over a three-year period as part of the initiative, an MIT spokesperson said.

The program, led by Berger and colleagues John Hart and Chris Love, who teach mechanical engineering and chemical engineering, respectively, grew from a desire to bring together separate strands of activity that exist at MIT to focus on manufacturing.

This was done, in part, because “we think manufacturing in the United States is, frankly, in pretty bad shape,” Berger said.

Manufacturing looks to rebuild its sector after immense losses

After U.S. manufacturing employment peaked at 19.6 million workers in 1979, that number fell during each of the five recessions and never fully recovered, according to a report from the U.S. Bureau of Labor Statistics. As of April, there were roughly 13 million manufacturing workers across the country.

Much of this decline occurred in the decade after China joined the World Trade Organization in 2001, Berger said, resulting in “tremendous shrinkage in the industrial ecosystem” as companies began to outsource and offshore.

Over this period, large firms like Kodak and IBM shrank or filed for bankruptcy, and their influence over the industrial ecosystem — through investments in workforce training, supplier partnerships and more — also began to fade. As a result, manufacturers have struggled with worker shortages and “we now have companies that rarely upgrade their equipment,” Berger said.

In 2023, MIT conducted a study that found less than 10% of U.S. manufacturers have deployed robots on their shop floors, citing design limitations, workforce challenges and high integration costs. In terms of AI, Berger said factories haven’t adopted the technology in a meaningful way yet.

“The few examples of using AI in factories now are mainly for machine vision, for quality control and predictive maintenance," she said. "But even there, there's a very low rate of adoption."

To help accelerate technology adoption and manufacturing productivity, MIT’s New Manufacturing Initiative has mapped out a series of education and industry partnership programs, including plans to establish new labs and a “factory observation” effort that allows students to visit production sites. The university also plans to partner with community colleges through MIT’s TechAmp program to bridge the gap between technicians and engineers.

“As American industry faces growing challenges, we need technologies that can respond in real time,” Peter Koerte, Siemens’ CTO and CSO, said in a statement. “This collaboration with MIT brings together the best of research and real-world implementation.”

Over the next three years, Siemens has pledged to invest the expected $1.5 million to fund research, innovation and training through MIT’s manufacturing initiative, with a focus on AI-driven technologies and workforce development.

The collaboration comes as manufacturers look to invest in the U.S. as volatile tariffs pressure operations and hike prices. In March, Siemens completed its $10 billion acquisition of Michigan-based software company Altair and recently opened manufacturing facilities in Fort Worth, Texas, and Pomona, California. 

Energy company GE Vernova, which has committed $50 million over the next five years to MIT research and innovation, is also investing nearly $600 million to expand and update its factories and facilities across the nation to meet surging electrical demand.

Scott Strazik, CEO of GE Vernova, posted on LinkedIn about MIT’s partnership, highlighting its focus around driving innovation, enhancing production and scaling new manufacturing through research and breakthroughs in technology.

“We’re entering a new era where energy, manufacturing, and economic prosperity are deeply intertwined,” he wrote on LinkedIn. “Program’s like MIT’s #INM are essential to ensuring we don’t just keep up, but we lead. Proud to see this kind of vision and collaboration taking shape. The future of energy will be built, quite literally, by what we make next.”

Another key part of MIT’s manufacturing effort is to address the skills gap across the industry, but the definition of what that means can vary from sector to sector. Semiconductor makers may seek workers who can operate advanced machine learning equipment. Meanwhile, a number of companies are struggling to find workers who can operate older, sometimes outdated, machinery.

“The skill he wants is someone who can work on his 1940s machines,” Berger said about one of the metal worker owners she spoke with. “But I don’t think most of us in this country think that we ought to be educating people to work on 1940s machines.”

 As tariffs and labor constraints shape the economic landscape, manufacturers are exploring process streamlining, domestic hiring, and nearshoring as key strategies for the rest of 2025. 

For manufacturers unclear on the best way forward, experts recommend a long-term perspective — especially since such investments will carry costs beyond the year’s end. 

Gregory DeYong, associate professor of operations management at Southern Illinois University said manufacturing leaders have and should continue to make investments with longevity in mind. 

“Whenever manufacturing [organizations] make a decision, that's kind of long-term. I tell my students, when Ford builds a plant, they expect it to run for 100 years. They're not looking at tomorrow or next week or next month when they're making these decisions,” DeYong said.

As such, manufacturers who align investments with broader strategic goals, and keep reactionary decisions in check, will see the most long-term benefits. 

Combating tariffs with leaner processes and nearshoring

The arrival of tariffs earlier this year brought only marginal clarity to the economic future of the industry, instead ushering in a pause in deal activity and decision-making, said Streamliners Management Consulting CEO Andreas Haag. 

Considering the volatility of the tariff landscape — and the uncertainty of their extent or even existence in the future — Haag predicts that manufacturers will only invest in those solutions that might benefit them regardless of the fate of tariffs. 

For many, that’ll involve following trends such as nearshoring, or relocating production closer to markets, and optimizing existing processes to absorb cost increases.

“My expectation is they will do cost reduction initiatives that are positive, even if the tariffs fall one day,” said Haag. “A lot of management focus is going to be on improving output and improving efficiencies to get your unit costs to offset the price increases from China.”

For others, nearshoring will help cushion the shock of tariffs — and may pay dividends even if they disappear in 2026. 

“Nearshoring to say, Mexico or Central America (electronics in Costa Rica, for example) is justified when tariff costs outweigh savings from low-cost countries like China or there are short product life cycles due to new editions, models, etc, [making] response time to market key,” said Ted Stank, co-executive director of the Global Supply Chain Institute at the University of Tennessee Knoxville.

Unlike process streamlining, though, experts say nearshoring is not a bandwagon everyone should hop on, and is a trend that requires a little more nuance in its consideration. Depending on your product, investing in a new production facility entirely might actually be the more beneficial option.

“Investing in a new factory or warehouse makes more sense [when] establishing long-term production stability for industries with high-volume, long life cycle products, such as semiconductors or EVs,” says Stank. 

That’s because downtime in such production facilities — or even a disruption in their volume of production — can translate into high costs. 

“A good example is all the investment in computer chip manufacturing in the last four years, [such as] TSMC’s $40 billion investment in Arizona for advanced chip manufacturing — motivated by geopolitical tensions, security concerns, and U.S. subsidies,” said Stank. 

Such investments make sense regardless of where manufacturers and their suppliers stand next year. 

Commenting on the volatile situation that catalyzed such trends, DeYong said, “From a U.S. manufacturing standpoint, [this] is ‘good uncertainty,’ because this is the kind of thing that gives people an impetus to maybe make some calls that they were waiting on.” 

Haag said whether manufacturers nearshore, or opt to source in the U.S., they shouldn’t cut ties with Chinese manufacturers. 

“Make sure you have very good communication with your Chinese suppliers, maintain the relationships, and explain to them why you are now sourcing in the U.S., and that your intention is to switch back to them when or if the tariffs come down,” he said.

Labor shortages will press the deportation topic

According to a joint study by Deloitte and the Manufacturing Institute, American manufacturers could be short by as many as 3.8 million new workers by 2033, with 1.9 million of those roles going unfilled if today’s labor gaps go unaddressed.

Stricter immigration enforcement during 2025 has also caused sudden vacancies in critical operational roles, especially low-wage, physically demanding jobs that are difficult to fill, Stank said. 

“This is a very significant issue,” Stank said. “In places where labor-intensive operations exist — particularly in the Southeast and Midwest — the reliance on immigrant labor is substantial. Workforce shortages can cause limited supply of products that will ultimately raise prices.” 

Stank also said this activity could lead to rising wages. 

“To attract domestic workers, companies have had to raise wages and offer additional benefits, increasing operations expenses. Remember what happened with wages in some industries during COVID? Same thing here!” he said.

But even with such incentives, Stank said some industries “struggle to recruit domestic workers for roles that are seen as undesirable due to working conditions, like meat processing, some construction (roofing for example), or agriculture field work.”

Some additional ways to adjust, according to Stank, include "focusing on hiring documented immigrants, including through visa sponsorship, or developing partnerships with community colleges or workforce agencies aim to retrain local populations."

"Will it be enough?” he asked. “Time will tell."