How American Dynamism is Reshoring Critical Manufacturing for National Security
The U.S. is reshoring critical manufacturing to bolster national security, create jobs, and reduce dependence on foreign supply chains.
The U.S. is reshoring critical manufacturing to strengthen national security and reduce reliance on foreign supply chains. Here's what's happening:
Job Creation: In 2022, reshoring efforts created 350,000 U.S. jobs.
Semiconductor Growth: U.S. chip production is set to rise from 12% to 20% of global supply by 2030, supported by $450 billion in investments.
Defense Readiness: Domestic manufacturing is addressing supply chain vulnerabilities, such as the country's reliance on China for 92% of rare earth magnets.
Key Technologies: AI, 3D printing, and factory automation are cutting costs, boosting efficiency, and improving production timelines.
Government Support: Policies like the CHIPS Act ($280 billion funding) and Defense Production Act are driving investments in domestic manufacturing.
Challenges remain - worker shortages, aging facilities, and rising costs - but targeted strategies, such as workforce training and infrastructure upgrades, are helping overcome these barriers. The reshoring movement is essential for securing the U.S. industrial base and ensuring military and economic stability.
Why national security is a priority in funding the CHIPS Act
Why Critical Manufacturing Must Return to the US
The need to bring critical manufacturing back to the U.S. has become urgent as global disruptions expose vulnerabilities threatening national security and military readiness.
Security Risks of Foreign Supply Chains
The U.S. defense sector faces significant risks due to its reliance on foreign supply chains. For example, China holds a dominant position in critical mineral processing, controlling:
63% of global rare earth mining
85% of rare earth processing
92% of rare earth magnet production
These dependencies leave the U.S. exposed. The Center for Strategic and International Studies has warned that "the U.S. defense industrial base is not adequately prepared for the international security environment that now exists".
Real-world examples highlight the risks. In 2022, the Department of Justice uncovered a counterfeit scheme involving $1 billion worth of Chinese-made Cisco components sold to U.S. entities, including the Department of Defense. Even more alarming, it took 12 years to discover that all 825+ F-35 jets delivered contained a component made with a Chinese alloy prohibited by U.S. law and Pentagon regulations.
"We're moving past the post-Cold War era and starting to get our industrial capacity up again where it needs to be. It's not where it needs to be. It's going to take years to do this. Everybody ... is recognizing this."
These vulnerabilities have already caused program delays and disrupted the supply of critical defense and aerospace materials.
Supply Chain Disruption Examples
The aerospace industry has been hit especially hard. Commercial aerospace manufacturers are facing massive backlogs, with orders taking up to 13 years to fulfill at 2023 production rates. Supply chain challenges have become so severe that aerospace executives mentioned "shortages" 18 times more frequently during 2022 earnings calls compared to 2014.
Another example is the Columbia-class submarine program. Military leaders have identified supply chain issues as the "number 1 risk" to meeting program demands. These disruptions go beyond delays—they can have deadly consequences. In June 2020, an F-16 crash that killed 1st Lt. David Schmitz was linked to failed transistors and microchips, and allegations of counterfeit components emerged during the investigation.
These examples highlight the urgent need to rebuild domestic manufacturing to safeguard national security and maintain military readiness.
Key Technologies Enabling US Manufacturing
Advanced manufacturing technologies are reshaping U.S. defense and aerospace production by cutting costs, speeding up timelines, and improving security. Let’s dive into the key technologies driving these advancements.
3D Printing Applications
3D printing is changing the game in defense and aerospace production. By 2026, this market is expected to reach $5.58 billion. For instance, Northrop Grumman used Stratasys FDM® technology to 3D print tooling for rocket motor propellant casting. This innovation slashed fabrication time from a year to just six weeks. Chase Smaellie, a Tooling Engineer at Northrop Grumman, highlighted the impact:
"When we're looking at delivery and payment from a customer, meeting our deadlines and obligations, and how that affects our business, that's huge. There are dollars in there that we are winning back by meeting deadlines and going faster by using new processes. Just by casting a motor and firing it in a year for the SMART Demo project, that's opened doors for our company."
BAE Systems has also embraced 3D printing, which is used to create metal parts for Tornado fighter jets. These parts, such as cockpit radio covers and landing gear guards, cost under $154 each, saving the company hundreds of thousands annually.
Factory Automation Systems
Automation is helping manufacturers tackle labor shortages and reduce errors - especially since human error is responsible for 80% of manufacturing defects.
Beyond physical automation, digital tools also play a role in improving production efficiency.
AI in Production Processes
Artificial Intelligence is revolutionizing manufacturing with tools for predictive maintenance, quality control, and supply chain management. AI-powered vision systems, for example, allow robots to handle more complex tasks. Joe Cutillo, CEO of Sterling Infrastructure, shared his perspective:
"The first 15 years of my career were more about consolidation: moving manufacturing to Mexico or Asia or to Eastern Europe. It is truly the first time in my life I've seen stuff coming back."
Airbus CTO Grazia Vittadini also noted the potential of 3D printing:
"3D printing has the potential to lighten an aircraft by 55 percent"
These advancements are making domestic production more competitive and ensuring a secure supply of critical components for national defense.
US Government Support Programs
The U.S. government has implemented focused policies and partnerships to restore critical manufacturing operations. These efforts are designed to bolster national security and strengthen the country's industrial base.
Current Laws and Funding
The CHIPS and Science Act is central in boosting U.S. manufacturing, allocating $280 billion in funding. This includes $39 billion for manufacturing subsidies and a 25% investment tax credit for chip production equipment. A few major projects benefiting from this include:
Company Investment Location Government Support Intel $20 billion (up to $100 billion) Ohio $8.5 billion from CHIPS Act TSMC $40 billion Arizona Part of $39 billion subsidies Micron Technology $20 billion Clay, NY $5.5 billion in state tax credits
This funding is a key driver of government and private industry collaboration. The Defense Production Act (DPA) also gives the President authority to boost domestic manufacturing for national security purposes. According to FEMA.gov:
"The Defense Production Act (DPA) is a U.S. law that grants the President powers to ensure the nation's defense by expanding and expediting the supply of materials and services from the domestic industrial base."
Government-Industry Projects
Federal agencies are teaming up with private companies to enhance manufacturing capabilities. One example is the Manufacturing Extension Partnership (MEP) National Network, which employs nearly 1,400 experts nationwide. Their results include:
$15 billion in new and retained sales (FY 2024)
$5 billion in new client investments
Over 108,000 jobs created or retained
$2.6 billion in cost savings
Another notable initiative is the American Aerospace Materials Manufacturing Tech Hub, which received $48 million from the Department of Commerce to advance aerospace manufacturing in Washington and Idaho. U.S. Secretary of Commerce Gina Raimondo highlighted the importance of this investment:
"To out-innovate and out-compete the rest of the world, we need to ensure we're investing in the industries of the future that will drive American innovation, manufacturing, and workforce to succeed in a 21st century economy – that's how America maintains its competitive edge."
The impact of these programs is already visible. Manufacturing spending in July 2023 was 74% higher than the previous year. In 2022, U.S. manufacturing facilities saw an annual spending rate of $114.7 billion, a 40% year-over-year increase. These initiatives are paving the way for industries to scale production back to the U.S..
Key Industries Moving Production to US
Manufacturing is making a strong comeback in the U.S., with key industries focusing on supply chain resilience and national security.
US Chip Manufacturing Growth
The U.S. is set to triple its chip production capacity by 2032, marking a 203% increase. This growth will raise the country's share of global chip manufacturing from 10% to 14% by 2032.
Several major semiconductor companies are making significant investments:
Company Investment Location Expected Completion Impact Intel $20 billion Chandler, AZ 2024-2025 Over 6,000 construction jobs, advanced chip production Texas Instruments $11 billion Lehi, UT 2026 800 new jobs, 300mm wafer fabrication
Since introducing the CHIPS Act, over 80 new semiconductor projects have been announced across 25 states, with private investments nearing $450 billion. These investments highlight the importance of chips in maintaining national security.
Defense Parts Production
The defense industry is also ramping up domestic production. For instance, 3M has tripled its N95 mask production at facilities in Wisconsin and South Dakota.
Steve Lunau, a partner at One Equity Partners, explains the broader trend:
"We're witnessing a massive 'reshoring' trend supporting investments in North American industrial activity. After the tumultuous geopolitical environment of the past four years, companies are increasingly looking to shorten their supply chains or - at a minimum - have a solid presence with sufficient access to the North American economy."
Raw Materials Supply
Ensuring access to raw materials is another key part of the strategy to reduce foreign dependence and support domestic production for high-tech and defense industries.
Brian McMorris, founder and president of Futura Automation, highlights the urgency:
"It's become a matter of national security, to be honest, in many different ways. Not just [in] defense, but also pharmaceuticals, food, automotive and [other sectors], we can't lose all of our manufacturing or we have nothing."
Key manufacturing statistics underscore this shift:
Around 1.2 million manufacturing jobs have returned to the U.S. since 2019.
90% of North American manufacturers plan to bring at least part of their operations back to the continent within five years.
A mix of government incentives, private funding, and strategic priorities is driving this steady growth in domestic manufacturing.
Barriers to US Manufacturing Growth
Despite advancements in technology and supportive policies, several challenges continue to hinder the progress of U.S. manufacturing.
Worker Training Needs
The manufacturing sector faces a growing skills gap. A potential shortfall of 2.1 million workers by 2030 could result in a $1 trillion loss. As automation and digitization reshape the industry, the demand for specialized skills has surged.
Paul Wellener, Deloitte vice chairman, points out:
"Given the foundational role the manufacturing sector plays in our nation's economy, it is deeply concerning that at a time when jobs are in such high demand nationwide, the number of vacant entry-level manufacturing positions continues to grow."
Some of the most pressing workforce challenges include:
Challenge Impact Growth Rate Advanced Electronics Skills Severe shortage 318% increase Automation Expertise Critical gap 525% increase Big Data Analytics Major deficit 771% increase
Currently, 77% of manufacturers struggle to attract and retain workers, and 65% believe workforce skills are not keeping pace with evolving industry demands.
These workforce issues are compounded by outdated infrastructure across the sector.
Required Facility Updates
Aging manufacturing facilities in the U.S. present a serious challenge, especially for national security. The average facility is over 50 years old, and modernizing these spaces requires an estimated $15–25 billion annually.
Key infrastructure concerns include:
32% of manufacturers identify aging infrastructure as a primary competitive challenge.
Over 30% of facilities are operating beyond their intended lifespans.
Upgrades will require consistent investments over the next decade.
The American Society of Civil Engineers rated U.S. infrastructure with a "D+" grade, underlining the urgency of these updates to support advanced manufacturing.
On top of workforce and infrastructure issues, rising costs are another hurdle manufacturers must overcome.
Cost Reduction Methods
As reshoring efforts grow, manufacturers face increasing labor costs (up 4.2%) and rising energy prices faster than general inflation.
Carolyn Lee, executive director of the Manufacturing Institute, highlights the need for inclusive workplaces:
"Manufacturers are proud to lead efforts to build stronger, more diverse and inclusive workplaces because we are committed to being the solution. As we expand our programs at The Manufacturing Institute, we're making sure that Americans of all backgrounds in all states can find a home in manufacturing and get equipped with the skills to seize these opportunities."
To address cost pressures, manufacturers are turning to several strategies:
Process Optimization: Applying lean manufacturing techniques can cut costs by 5–20%.
Energy Efficiency: Conducting audits and adopting energy-saving technologies.
Supply Chain Improvement: Building stronger supplier relationships and simplifying procurement.
Workforce Development: Offering training programs to boost productivity and retention.
Addressing these challenges will require collaboration between the government, industry leaders, and educational institutions to ensure the growth of the U.S. manufacturing sector and strengthen national security.
Next Steps for US Manufacturing
The future of U.S. manufacturing hinges on coordinated efforts and targeted actions. In 2022, reshoring efforts created 364,000 jobs—a 53% jump from 2021—highlighting the urgency of strategic investments and policy updates. With manufacturing contributing $2.3 trillion to the U.S. GDP in 2021, its importance to the economy is undeniable. Strengthening domestic supply chains and embracing emerging technologies are key to staying competitive.
Here’s a breakdown of priority areas and actionable steps:
Priority Area Current Challenge Next Steps Workforce Development 608,000 unfilled manufacturing jobs (May 2023) Expand apprenticeships and engineering programs Infrastructure Gaps in digital transformation Implement smart factories and automated systems Supply Chain Dependence on foreign suppliers Build domestic supplier networks Technology Integration Limited use of advanced systems Invest in AI, robotics, and 3D printing
These focus areas outline a clear path to modernizing U.S. manufacturing.
"Let's work together to establish a long-term pro-active national Industrial Policy that will increase U.S. competitiveness and bring back millions of jobs."
States like South Carolina and Indiana illustrate what’s possible with focused initiatives. South Carolina’s EV Economic Development Initiative has attracted major investments by offering tax credits and infrastructure support. Meanwhile, Indiana’s $320 million innovation program has bolstered its manufacturing ecosystem by prioritizing Industry 4.0 technologies and small business suppliers.
The Manufacturing Extension Partnership (MEP) National Network is another success story. Every federal dollar invested has generated $35.80 in new sales growth and $40.50 in new client investment. Such public-private collaborations are essential for driving progress. Key action items include:
Infrastructure Modernization: Upgrade ports, railways, and highways to support advanced manufacturing.
Technology Integration: Speed up the adoption of automation and AI-driven solutions.
Workforce Training: Address the projected shortfall of 2.1 million workers by 2030.
Supply Chain Resilience: Develop strong domestic supplier networks and maintain strategic stockpiles.
These efforts will strengthen U.S. manufacturing, boosting national security and economic stability.