NEW YORK • When visitors arrive at the office of America Knits in tiny Swainsboro, Georgia, the first thing they see on the wall is a black-and-white photo that company co-founder Steve Hawkins discovered in a local antiques store.
It depicts one of a score of textile mills that once dotted the area, along with the workers that toiled on its machines and powered the local economy. The scene reflects the heyday - and to Mr Hawkins - the potential of making clothes in the rural South.
Companies like America Knits will test whether the United States can regain some of the manufacturing output it ceded in recent decades to China and other countries. That question has been contentious among workers whose jobs were lost to globalisation. But with the supply chain snarls resulting from the coronavirus pandemic, it has become intensely tangible from the consumer viewpoint as well.
Some corporate giants are keen on testing that premise, if not for finished goods, then certainly for essential parts.
General Motors disclosed last month that it was considering spending upwards of US$4 billion (S$5.4 billion) to expand electric vehicle and battery production in Michigan. Just days later, Toyota announced plans for a US$1.3 billion battery plant in North Carolina that will employ 1,750 people.
In October, Micron Technology said it planned to invest more than US$150 billion in memory chip manufacturing and research and development over the next decade, with a portion of that to be spent in the US. And in November, South Korean giant Samsung said it would build a US$17 billion semiconductor plant in Texas, its largest US investment to date.
Bringing manufacturing back to the US was a major theme of former president Donald Trump, who imposed tariffs on imports from allies and rivals, started a trade war with China and blocked or reworked trade agreements. Still, there was little change in the balance of trade or the inclination of companies operating in China to redirect investment to the US.
Since the pandemic began, however, efforts to relocate manufacturing have accelerated, said Mr Claudio Knizek, global leader for advanced manufacturing and mobility at EY-Parthenon, a strategy consulting firm. "It may have reached a tipping point," he added.
Decades of dependence on Asian factories, especially in China, have been upended by delays and surging freight rates - when shipping capacity can be found at all.
Backups at overwhelmed ports and the challenges of obtaining components as well as finished products in a timely way have convinced companies to think about locating production capacity closer to buyers.
"It's absolutely about being close to customers," said Mr Tim Ingle, group vice-president for enterprise strategy at Toyota Motor North America. "It's a big endeavour, but it's the future."
New corporate commitments to sustainability are also playing a role, with the opportunity to reduce pollution and fossil fuel consumption in transportation across oceans emerging as a selling point.
Repositioning the supply chain is not just an American phenomenon. Experts say the trend is also encouraging manufacturing in northern Mexico, a short hop to the US by truck.
Called near-shoring, the move to Mexico is paralleled in Europe with factories opening in eastern Europe to serve western European markets like France and Germany.
"We're starting to see it in Mexico as well as in the US," said Ms Theresa Wagler, chief financial officer of Steel Dynamics, a steel-maker based in Fort Wayne, Indiana. "Many companies now prefer security of supply over cost."
Mr Knizek of EY-Parthenon expects industries with complex and more expensive products to lead the resurgence, including cars, semiconductors, defence and aviation, and pharmaceuticals. Anything that requires large amounts of manual labour, or that is difficult to automate, is much less likely to return.
For items like shoes or furniture or holiday lights, for example, "the economics are daunting", said Professor Willy Shih at Harvard Business School. "It's hard to beat wages of US$2.50 an hour."
Apart from trade tensions and shipping delays, he believes China retains huge advantages, like a mammoth workforce, easy access to raw materials and low-cost factories. "For a lot of what American consumers buy, there aren't a lot of good alternatives," he said.
But as the moves by car and tech companies show, the US can attract more sophisticated manufacturing. That has been a goal shared by Republican and Democratic administrations, including President Joe Biden's, which supports US$52 billion in subsidies for domestic chip manufacturing.
"Incentives to help level the playing field are a key piece," said Mr David Moore, chief strategy officer and senior vice-president at Micron. "Building a leading-edge memory fabrication facility is a sizeable investment; it's not just a billion or two here and there. These are major decisions."
In the aftermath of the coronavirus and restrictions on exports of goods like masks, moving manufacturing closer to home is also being viewed as a national security priority, said Mr Rick Burke, a managing director with consulting firm Deloitte. "It's no longer a discussion about cost, but about supply-chain resiliency."
NYTIMES
