For decades, American factories have shuttered as production moved overseas in search of cheaper labor and larger supplier networks. Between 1997 and 2022, the number of U.S. manufacturing firms and plants dropped by 25%, according to McKinsey & Co.. Jobs that once employed nearly 20 million Americans now account for just 12.7 million workers.
Globalization, trade agreements like the North American Free Trade Agreement, and China's entry into the World Trade Organization in 2001 opened the door to cheaper production abroad. Lower labor costs, weaker environmental regulations, and robust supplier networks in countries like China and Vietnam made overseas manufacturing an attractive option for many U.S. companies.
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Guardian Bikes — A Rare Success Story
In Seymour, Indiana, Guardian Bikes has bucked the trend. Starting in 2022, the children's bike manufacturer moved production from China to its own 540,000-square-foot U.S. facility, producing about 12,000 bikes per week, according to CNBC.
CEO Brian Riley said the decision was driven by long shipping times, inventory issues, and quality concerns. "It wasn't easy," he told CNBC. "It took a lot of risk taking, and it took a lot of blazing a trail, and it even took getting into losing money."
Guardian's move was aided by automation and local suppliers, but even then, some parts — like chains and reflectors — are no longer made in the U.S. at scale. The company has had to work creatively with domestic manufacturers to fill the gaps.
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Why Reshoring Is So Hard
For many businesses, producing in the U.S. isn't feasible. Rick Woldenberg, CEO of educational toy maker Learning Resources, told CNBC that he's explored the idea for over a decade but found labor costs prohibitively high and suppliers unwilling to produce at lower volumes. "We're just kind of boxed out," he said.
Scott Paul, president of the Alliance for American Manufacturing, told CNBC that in some industries, the U.S. is "almost starting from scratch" when it comes to the supplier networks needed to make certain products. Without a domestic base for critical components, companies remain dependent on overseas inputs.
The Price Factor
Even with tariffs and targeted subsidies like those under the CHIPS Act, some economists question whether a large-scale manufacturing revival is realistic.
"Think about how much a pair of sneakers would cost if they were made here in the United States," Colin Grabow, associate director at the Cato Institute, told CNBC. "It would be a lot more expensive, so we should all welcome the fact that goods are being produced in the most efficient ways possible because that lowers prices for us and allows us to raise our standard of living."
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Labor costs are a major driver of this price gap. The average manufacturing wage in the U.S. is about $35 per hour, according to the Federal Reserve Bank of St. Louis. Meanwhile, wages are roughly $4 in China and $1.30 in Vietnam, according to CNBC. Overseas factories also have less stringent environmental regulations and billions of dollars in government investment.
A Difficult Road Ahead
While companies like Guardian Bikes show it's possible to bring manufacturing back, their stories are still the exception. High labor costs, missing supplier networks, environmental compliance, and a global economy optimized for efficiency abroad all make reshoring a steep climb.
For now, U.S. manufacturing may continue to grow in targeted sectors, but a broad "Made in America" revival faces economic and logistical hurdles that no single company or policy can solve overnight.
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