Why do I always end up laughing whenever I see talk of America reshoring manufacturing?
Probably because those two words, America and manufacturing, drifted apart a very long time ago.
The reason manufacturing looks like it is being reshored to the US right now is not that building a factory there actually pays off. It comes down to one thing: tariffs, or to put it another way, a trade barrier erected on the backs of American taxpayers. It is certainly not because building in the US brings higher productivity or efficiency.
Put another way, without that trade barrier, no company in its right mind would ever build manufacturing in the US. Even less so if it is not part of the 1% of truly critical manufacturing, the strategic goods like semiconductors.
Nobody is willing to pay a premium for a screw just because it was made in America.
So how should we view the argument that advances in robotics will offset these costs?
That one makes no sense either. Unfortunately, there is already a country making the parts for those robots far more cheaply and efficiently than the US, and that country is China. The gap between the US and China in cost, technology and efficiency keeps widening. Unless the US pours in subsidies on the scale of its own defense budget, closing that gap is impossible. And even if the US somehow advances its robotics far enough to judge for itself that it can compete and steps into the ring, China will already have achieved recursive self improvement in manufacturing. Robots building robots, pushing manufacturing cost and efficiency to the absolute limit.
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A super smart scientist asked me last week: what's so hard about reshoring general advanced manufacturing (short of TSMC frontier precision chemistry)? Isn't the issue just labor cost? Nope.
A toy example to illustrate: We're trying to build a lot of drone motors in America right now, and falling short. It's not a labor cost issue.
The work instruction says: this magnet, this adhesive, cure at this temperature, wipe the rotor first. Any competent team can build the station and follow it.
But in week 3, motors start failing vibration testing. Some of them, mostly night shift. Also, weirdly, whenever the careful new hire is on station.
The adhesive cures differently with humidity, and the dehumidifier cycles differently at night. The new hire wipes the rotor generously, and that leaves a solvent film the adhesive doesn't like very much. Someone who has run a motor line before can figure this out in 10m. Everyone else -- struggle city.
The "fix" is two lines in the work instructions: run the dehumidifier continuously, one solvent wipe per rotor. But those lines aren't in the work instruction, and they're not in anyone's! At best the fix becomes a corrective-action report in one line's files, linked to nothing and never read.
A motor line rapidly may go from 5 to 40 stations, each with a dozen of these painful stories on the weekly as it grows. "What Shenzhen knows" is not written down in a book whose covers can be sliced off and ingested into a model, it's a few million humidity stories stored in people, and a pace of knowledge-rich adjustment that keeps cost down and yield high. The only way to get it back is work with people who have brought up lines, to reshore and grow the ecosystem of people who have this knowledge, and to capture that knowledge as we build.
Lots of people have clever ideas about the data capture/API piece, but we think the business of manufacturing may need equal portions pain tolerance, customer commitment, and cleverness on talent.
America needs to solve the other half of reshoring.
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