After a year of losing an average of 9,000 manufacturing jobs per month, February brought a long-awaited reversal: the addition of 10,000 manufacturing jobs, according to a new Bureau of Labor Statistics report. That’s the best performance since June 2022, and it’s certainly a bright spot when it comes to restoring domestic production capacity and reclaiming our national economic strength.
While it’s a step in the right direction, a much greater transformation is urgently needed. Factory closings and a decline in newly-formed start-up businesses highlight the fragmentation and weakening of America’s industrial base over recent decades. Since 1997, the number of U.S. manufacturing companies has declined by about 25%. The impact on jobs has been even more severe—since 1979, manufacturing employment has shrunk by 36%, with 7.5 million jobs lost. In 1998, 11% of the total workforce -- 18.1 million Americans – worked in manufacturing. Just a decade later, that number had dropped to 13 million, making up only 6.7% of the workforce. This steady decline has weakened the country’s industrial foundation and economic resilience.
Having outsourced much of the American manufacturing base – hemorrhaging well-paying jobs while hollowing out vibrant communities in the process – the United States now finds itself overly dependent on the manufacturing capacity of other countries, including potentially adversarial nations.
The COVID crisis served as confirmation of our supply chain vulnerabilities. As the pandemic spread, production lines slowed, as parts and components produced overseas were suddenly unavailable. Customers faced months-long delays for everything from cars to washing machines, while a far more dire crisis unfolded—America’s near-total reliance on foreign manufacturers for essential medical supplies like PPE and ventilators put lives at risk.
The pandemic reminded us that there are real consequences for a country that doesn’t make the things it needs. Indeed, American history demonstrates that national power is industrial power and that wars are won and lost on factory floors. Yet, in our race to optimize for financial performance in recent decades, we have lost sight of this truism and risk giving away our position as a global leader in manufacturing. China is projected to make up 45% of the entire world’s industrial production by 2030. In contrast, our reduced industrial capacity has left us ill-prepared for a prolonged military conflict. The slow and inefficient restoration of wartime supplies, including those sent to Ukraine, underscores this vulnerability.
Thankfully, our leadership is again prioritizing American manufacturing as a key component of the national economic agenda. We are seeing a number of policies designed to both rekindle the flames of Freedom’s Forge and remove onerous regulations that have made it more difficult for manufacturers to do their jobs. Creating a regulatory environment that encourages domestic manufacturing is a complex problem which will take time and a deliberate use of the many different facets of national power, including tax cuts for businesses that make their products domestically and tariffs to level the playing field for domestic manufacturers who’ve long been harmed by America’s lack of an effective industrial policy.
The steps being taken by the Trump administration are already yielding results with companies like Apple, Stellantis, and TSMC announcing investments totaling hundreds of billions of dollars to boost production in the United States. Many other companies have since followed suit.
While announcements from large firms are promising for American workers, the true potential to fuel a manufacturing renaissance lies with small and medium-sized manufacturers. Over 98% of the 244,000 manufacturers in the United States employ fewer than 500 workers, while 83% employ fewer than 50. Around 70% of the entire 13 million manufacturing workforce is employed by these smaller companies.
Mid-market manufacturers are the heart of American manufacturing. In addition to providing great jobs that anchor many middle-American communities, the mid-market manufacturing entrepreneurs are where the majority of our manufacturing capacity resides. In order to fully tap into America’s manufacturing strength, we need to unleash the potential of the tens of thousands of small and medium sized manufacturers. Many of these businesses have the experience, equipment, and expertise to support and even supercharge the large-scale manufacturers.
What has often held them back is the challenge of finding customers for their manufacturing expertise, coupled with a supply chain bias toward foreign suppliers. That is, after decades of looking for cheaper sources overseas, procurement teams have become predisposed to look outside the United States. By engaging with the ecosystem of small and medium-sized manufacturers and leveraging AI-powered tools to connect them with larger manufacturers and the government’s sustainment procurement network, we can foster competition, promote manufacturing excellence, and drive greater efficiency—all while reducing our reliance on foreign producers.
Reviving the United States’ manufacturing base must continue to be a critical priority if we are to usher in a new golden era of economic prosperity. America must not delay in making greater and better use of our underutilized manufacturing capacity by tapping into the strength of our communities’ manufacturers.
Bret Boyd is CEO of Sustainment, a technology company dedicated to helping American manufacturers thrive.
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