Bret Boyd

Insider Perspective: U.S. Manufacturing

There has been so much talk about the end of globalization, tariffs, and products that are American made. What is really happening now?

Our perspective from working with thousands of manufacturers at Sustainment is that we are in the midst of a global realignment that will affect every category of business, investor, and public institution. Peak globalization is in the past. The trend away from a maximally globally outsourced economic model has been happening for ~10 years but was significantly accelerated by Covid. Countries are working to encourage the development of local industrial capacity. Companies are racing to build resilience into their supply chains by dual-sourcing key items and biasing towards local suppliers who are less exposed to geopolitical risk.

Reindustrializing the United States and rebuilding our manufacturing economy in response to the overwhelming strength of China’s industrial output is a bipartisan issue. The Trump administration has obviously been focused on tariffs as its primary policy tool, but many of the major pieces of legislation from the prior administration were also attempts to encourage domestic manufacturing. We expect the country will be focused on manufacturing for the next 25+ years, regardless of who is in the White House.

What are the most effective strategies for businesses dealing with this shift?

Most Original Equipment Manufacturers (OEMs) rely upon a network of hundreds or thousands of manufacturing suppliers to build subcomponents that go into the end item they sell to their customers. These are important relationships which take time and investment to develop. For companies that sell complex items, it is virtually impossible for them to build a new supply chain overnight. 

The best practice is to approach this problem systematically, starting with the part or subcomponent groupings that are most important to the business. We help companies implement systems and develop new supplier relationships so that they have multiple sources of supply for each item–in many cases including onshore, nearshore, and offshore alternatives. Businesses need to be able to react quickly as tariff rates change and need to focus on “total cost ownership” calculations when comparing American vs. international suppliers.

What new opportunities are emerging for U.S. manufacturing suppliers?

We are in the early innings of a significant growth period for U.S. manufacturing businesses. Suppliers are getting inundated with new customer inquiries, and many businesses are growing, hiring, and investing in new capital equipment. While access to capital can be difficult for smaller manufacturers, the ones that are able to make investments to support future demand are going to be able to realize this opportunity. More business opportunities for U.S. manufacturers leads to a virtuous cycle resulting in more hiring at better wages, increased investment in advanced technology, and economic growth in middle-American communities. 

This is going to be great for Texas specifically, as Texas is the second largest and among the fastest-growing manufacturing states in the country.

How is Sustainment helping?

This is a big moment for Sustainment, which we started in 2020. Our company sells software to procurement and supply chain teams at larger companies to help them find and get work done with a broader network of U.S. manufacturing suppliers. We provide software for free to suppliers to help them be discovered by new customers, ranging from small business customers to giants like the Department of Defense. 

Please look us up at sustainment.com and create a free account to check us out or send me an email at bret.boyd@sustainment.com if you’d like to learn more. We work with hundreds of Texas manufacturers and are really optimistic about the future of manufacturing in our great state.