Every year, the U.S. government spends more than $600 billion on goods and services.
Yet, as of last year, just 16.8% of global manufacturing took place in the United States. That means the money we’re spending pads remarkably few constituent pockets.
That’s one of the biggest reasons that President Joe Biden made a point in March to bolster the “Made in America” program. He wants to incentivize corporations to bring operations back home.
The trouble is, there are reasons these companies had been offshoring.
On average, labor is 3-5X cheaper in foreign countries than in the U.S.
Environmental regulations elsewhere are far more forgiving than on American soil.
Profits and productivity were at all-time highs, enabling companies to focus their internal efforts on things they were best positioned to produce.
Well, the past few years have repeatedly poked holes in these reasons.
The COVID pandemic threw supply chains into upheaval.
The war in Ukraine shed light on the danger of relying on capricious global powers. The tension between China and Taiwan only further underscores this notion.
Of course, Russia is the chief supplier of oil and energy throughout Europe. China is the top global supplier of microchips integral to the production of practically every piece of new technology.
All of these stressors have combined to reinforce a once quiet tune: it’s long past time we ramped up American manufacturing.
Finally, signs are trickling in that this process is underway.
In 2022, U.S. companies are on track to reshore (the opposite of offshore) almost 350,000 jobs. That’s nearly 100,000 more than 2021, and a whopping 50X increase from 2010, when the Reshoring Initiative first began compiling this data.
So, what is the fallout of this sweeping shift?
Just who stands to gain the most from the uptick in domestic manufacturing?
The answer may not be as obvious as you think.
What This Means for Angel Investors
While it’s true that there will inevitably be an increase in the number of blue-collar jobs available to American workers, the reality is that it won’t be proportional to the increase in overall manufacturing.
This shouldn’t come as a surprise. These corporations got used to padding their pockets on the back of sky-high margins, and they’re not just going to abandon those benefits.
Instead, the real benefactor of this shift could be startups dabbling at the cutting edge of automation and manufacturing technology.
In the first quarter of 2022, North American companies ordered 11,595 robots for a $646 million sticker price. There’s never been a quarter with more sales, and this year projects to eclipse last year’s record.
Additionally, as enormous manufacturing facilities are constructed on American soil, the ripple effect through local economies will be far reaching. There will be other areas lifted up in the startup space that may not be obvious right now.
What that means for angel investors is opportunity.
While automation is the most obvious sector to monitor, it’s imperative to keep a broad view and an open mind.
Changes of this size give way to new landscapes altogether. Don’t miss your chance to secure the best view possible.