U.S. manufacturing: From disruption to resilience

After years of supply chain disruption, geopolitical uncertainty and rapid technological change, U.S. manufacturers are entering a new phase of growth. But, according to Manufacturers Alliance President and CEO, Stephen Gold, sustaining that momentum will depend on how effectively industry embraces AI, develops its workforce and continues investing at home.

U.S. manufacturing has been through an extraordinary period of disruption. The pandemic exposed vulnerabilities in global supply chains. Geopolitical tensions have intensified. Inflation and high interest rates have complicated investment decisions, while tariffs have introduced another layer of uncertainty for manufacturers operating across international markets.

At the same time, the pace of technological change has accelerated dramatically. Factory floors are becoming increasingly digital, artificial intelligence is moving rapidly from experimentation towards deployment, and manufacturers are being forced to reconsider how their organizations operate. Yet, despite the uncertainty, Stephen Gold is optimistic about the future of U.S. manufacturing.

Gold has spent around three decades working with manufacturing organizations and has led the association for the past 15 years. Manufacturers Alliance brings together senior executives from some of the country’s leading mid-sized and large manufacturers, spanning functions from operations and engineering to finance, legal and supply chain. His assessment of the current environment can be summed up in two words: frenetic and resilient.

“The last five years have been as disruptive as any in our lifetime,” Gold said. “We had the worst supply chain crisis imaginable, constant geopolitical turmoil, cyber security threats and now the emergence of AI.

“But what really comes to mind is the word ‘resilient’.”

That resilience has not emerged by accident. The succession of shocks has forced manufacturers to fundamentally rethink how they operate.

One of the clearest examples is supply chain management. The traditional emphasis on just-in-time production has increasingly given way to a “just-in-case” mentality, with companies placing greater emphasis on diversification, regional sourcing and supply chain visibility. Manufacturers, Gold argues, have had little choice but to adapt.

“They’ve had to overhaul the way they manage their supply chains,” he said. “You cannot compete today if your supply chains aren’t resilient and if your operating model isn’t staying ahead of the technology curve.”

Investment is driving confidence

Against that backdrop, it might seem surprising that manufacturers are displaying increasing confidence about the future. Yet Gold says the fundamentals of U.S. manufacturing remain strong, with technological advancement, investment and the industry’s experience of navigating recent crises helping to underpin a more positive outlook among senior executives.

Manufacturers have struggled to attract sufficient skilled workers for decades. But advances in automation, digital technologies and AI are beginning to provide companies with new ways to increase productivity while making better use of the people they already have.

At the same time, Gold points to growth across several areas of the U.S. manufacturing economy, including data center infrastructure, oil and gas, electrical infrastructure and transportation equipment.

Domestic investment has also been encouraged by changes in tax and regulatory policy, he said, with manufacturers investing in new factories, machinery and equipment. Then there is the experience of the pandemic which has also changed the mindset of manufacturing leaders.

“It proved how nimble and resilient these companies can actually be,” Gold said.

That experience has created what he describes as a psychological shift among CEOs. Rather than viewing disruption solely as a threat, many now have greater confidence in their ability to respond to it.

“They’re looking at the future and realizing that the promise of technology and their ability to be resilient is offsetting the costs of the disruption,” he said.

Reshoring is only part of the story

The political narrative around U.S. manufacturing has increasingly centered on reshoring, but Gold believes the reality is more nuanced.

Supply chain diversification began well before the latest wave of tariffs, driven initially by the disruption experienced during the pandemic. Among Manufacturers Alliance’s members, around 80% have reported diversifying their supplier base across multiple regions, while more than half have used nearshoring strategies, including sourcing from Mexico. However, relatively few are abandoning entire regions.

“These are global manufacturers,” Gold explained. “Their headquarters are here, but for the most part they are in those markets to serve those markets.”

Instead, Gold points to a broader and potentially more significant trend, namely increased domestic capital investment.

Reshoring means bringing production back that had previously moved elsewhere. Domestic investment, by contrast, involves putting new capital into U.S. manufacturing capacity regardless of where the previous production took place. For Gold, the latter is where much of the current momentum lies.

He points to a substantial increase in U.S. factory construction since 2021, with investment concentrated in areas including semiconductors, advanced industries, computer electronics, electric vehicle infrastructure and pharmaceuticals. Policies such as the CHIPS Act have helped support that investment.

“From our perspective, that kind of new investment serves the exact same purpose as reshoring,” Gold said. “What we want is to increase U.S. manufacturing capacity.”

This also points to an important evolution in the structure of American manufacturing. Some of the investment being attracted to the U.S. is not necessarily bringing back the traditional manufacturing operations that left decades ago. Instead, it is creating capacity in newer, technology-intensive industries.

“The investments are going into tech-related industries rather than traditional manufacturing industries,” Gold said.

For Gold, that is not necessarily a weakness. “Rising tides lift all ships,” he said. Growth in advanced manufacturing creates demand across a much broader industrial ecosystem, from machinery and components to infrastructure and services.

AI: From pilots to enterprise transformation

If supply chain resilience has been one defining theme of the past five years, AI could become the defining technology of the next five.

Manufacturers are already experimenting with AI across a wide range of applications, but Gold sees a growing divide between companies that are treating the technology as a collection of individual projects and those using it to rethink how their organizations operate. Manufacturers Alliance research with Roland Berger identified three broad groups.

The first is the “wait and see” group. These companies recognize the potential of AI but remain uncertain about where to invest and how to deal with the risks associated with rapidly changing technology.

The second group is made up of “test and learners”. They run multiple pilots across different functions and then selectively scale applications that demonstrate measurable benefits.

The third group – the “vanguard” – is taking a fundamentally different approach. Rather than simply introducing AI into existing processes, these companies are looking at how the technology could reshape their entire operating model.

“The vanguard are redesigning their whole operating models,” Gold said. “Instead of just applying AI within an existing system, they’re trying to rearchitect the entire enterprise.”

AI cannot reach its full potential if data remains trapped within organizational silos. A company might have sophisticated systems in one part of its business while relying on spreadsheets and disconnected databases elsewhere. Gold argues that the most successful manufacturers will be those capable of connecting these systems and functions.

“Most of our data is kept vertically – department by department,” he said. “It’s a completely new concept to say, ‘No, we don’t want it vertical. We need to tie it all together across the enterprise.’”

That means connecting everything from the back office and supply chain through to the factory floor and distribution channels. It also means breaking down one of manufacturing’s longstanding organizational divides: the separation between information technology and operational technology.

Gold believes manufacturers that can get their IT, OT and supply chain teams working together will be among those to see the earliest benefits from AI.

Technology will not eliminate the skills challenge

The rise of AI and automation inevitably raises the question of if manufacturers are struggling to recruit workers, could technology ultimately reduce their dependence on people?

Gold doesn’t believe so, and instead points to what he sees as a greater risk: manufacturers failing to attract enough skilled workers into the sector while the industry becomes increasingly technologically sophisticated.

The workforce challenge remains significant. Gold points to hundreds of thousands of manufacturing job openings in the U.S., illustrating the persistent gap between the industry’s demand for skills and the available workforce.

Automation can help by increasing productivity and reducing the number of people required for certain tasks. But it does not eliminate the need for skilled workers. Manufacturers still require people capable of managing increasingly sophisticated production systems, supply chains and distribution operations. And, importantly, Gold says he is not seeing manufacturers simply replacing workers with technology.

“Where we are seeing change is in upskilling,” he said. “They have to upskill because you can’t keep up with the rapid pace of technological advance otherwise.”

That could ultimately change the nature of manufacturing work rather than simply reduce the number of manufacturing jobs. Indeed, as factories become more automated and connected, the value of workers capable of understanding data, managing advanced equipment and integrating digital technologies will increase.

The next wave of manufacturing growth

Looking further ahead, Gold expects the industries surrounding AI and advanced technology to become increasingly important drivers of US manufacturing growth. Data centers are an obvious example.

The rapid expansion of AI is creating enormous demand for data center capacity, which in turn creates demand for a much wider manufacturing ecosystem. Energy is one of the most significant pieces of that puzzle. Gold points to the emergence of small modular nuclear reactors as a potentially important future industry, particularly as the energy requirements associated with data centers continue to grow.

“It’s very nascent,” he said. “But 10 years from now, you may see that be a completely new industry.”

The opportunity extends beyond data centers themselves. Semiconductor manufacturing, electrical infrastructure, smart products and the industries supporting intelligent systems could all benefit from the continued expansion of AI.

Gold also expects the U.S. rare earths sector to develop, encompassing not only domestic mining but recycling of electronic components and magnets.

Meanwhile, established industries such as oil and gas will continue to support a substantial manufacturing ecosystem, while investment in the country’s ageing electricity grid and utility infrastructure will create further opportunities. The common thread is infrastructure.

The technologies attracting the most attention – from AI and semiconductors to smart manufacturing – require physical infrastructure, energy, materials, machinery and skilled workers. That creates opportunities far beyond the technology companies developing the headline innovations.

Building the next generation of U.S. manufacturing

For all the optimism, Gold believes there are clear risks to the industry’s future competitiveness. Secure sourcing and resilient supply chains will remain essential. Continued investment in manufacturing infrastructure will be required, particularly as factories and products become increasingly connected and intelligent.

Skills will remain another critical issue. Manufacturers need workers with the capabilities to operate increasingly sophisticated production environments, while the education system must continue strengthening STEM skills and the industry’s ability to develop talent.

And then there is policy. Gold argues that policymakers need to understand the importance of maintaining a supportive environment for manufacturing investment, particularly around research and development.

“Public policy can, at the margins, and eventually in the center, have a huge impact as an obstacle,” he said.

For Gold, the lesson of the past five years is ultimately encouraging. U.S. manufacturers have faced an extraordinary succession of challenges and, rather than being overwhelmed by them, have adapted their supply chains, accelerated digitalization, invested in domestic capacity and become more comfortable with disruption.

That does not mean the next five years will be straightforward. The pace of technological change alone ensures that manufacturers will continue to face difficult decisions over where and when to invest. But Gold believes the sector is better prepared than it was before the pandemic.

“We’ve become so resilient,” he said. “I’m very confident that in five years we will be as competitive, if not more so, than we are today.”

For an industry that has spent much of the past decade reacting to disruption, that confidence may be one of its most valuable assets.