Two Years After Stellantis Opens Detroit's First Auto Plant in Three Decades, Tesla Gigafactories Dot The U.S. from New York to Texas - Is American Manufacturing Poised for a Renaissance?

Manufacturing has long been seen as on the decline in the US. Despite still accounting for well over $2 trillion in GDP, the once foundational sector has been waning since its height in the middle of the 20th century. Through much of the 50s, manufacturing accounted for over 25% of GDP and over 30% of jobs. Today those numbers have fallen to 11% and under 8%, respectively. 

A Competitive Edge?

The US labor market is extremely competent and generally intelligent. So, what the US lacks in access to cheap labor and access to certain raw materials, it makes up for in the sophistication and technical ability of its manufacturing.

The growing demand by consumers and world governments alike for a sustainable future is driving a surge in green manufacturing and other areas that require the technical sophistication of the US. Renewable energy-producing equipment – think solar panels and wind turbines – are made all over the US. Vestas VWDRY, for instance, has two major plants in Colorado.

Tesla

Tesla, Inc TSLA chief, Elon Musk, has famously said, "A factory deserves more innovation and more engineering skill than the product itself.” He wants to control every aspect of the production process. Tesla has "Gigafactories" all over the country and has plans to establish new facilities.

The company’s manufacturing prowess has been a catalyst for change, not only in the automotive industry but in the wider context of American manufacturing. Tesla’s approach to sustainable, eco-friendly production resonated with the changing consumer preferences.

Detroit

Stellantis NV STLA formerly known as Fiat Chrysler Automobiles, made headlines when it announced the opening of a state-of-the-art auto plant in Detroit. The decision was extremely significant for a city that was once the heart of American manufacturing and had become the face of its decline. 

The new plant was expected to play a crucial role in Stellantis’ efforts to produce a range of vehicles, including electric and hybrid models. With a focus on modern technology and sustainable practices, this venture represents a step towards revitalizing the once-thriving American automotive manufacturing sector.

Reshoring

This process of revitalization for American manufacturing is bringing industry back to the US. Companies left the US in droves to bring their factories to countries with cheap labor pools, but now with the growing need for high-tech capabilities, manufacturing – and the jobs that come with it – are coming home. 
Investors looking to capitalize on this trend can pick individual companies to back or opt for thematic funds – like The Tema American Reshoring ETF RSHO – which are dedicated to investing in the companies driving and profiting from this move back to the US.