In the most stable times, global manufacturing is a delicate exercise in simultaneously and agilely balancing hundreds, if not thousands, of variables—from weather, the impact of disruptive technologies, and sophisticated competition to the competing and sometimes conflicting demands of the organization, customers, trading partners, markets, and governments with respect to tariffs and trade policies.
And for manufacturing, these are hardly the most stable of times.
For more than a decade, Kearney has tracked US nearshoring and reshoring activities, perhaps the most significant external manifestation of the churn so many global manufacturers have had to address. Over the 12 editions of our annual Reshoring Index report, we’ve tracked the global manufacturing industry’s response to everything from localized trade, civil, and guerilla wars and disruptive weather events and natural disasters to international pandemics, the emergence of AI, and multiple approaches to supply chain design.
In all honesty, at least in the beginning, we may have been a bit guilty of understating the criticality of the macroeconomics of nearshoring and reshoring. But as time went on, we began to see seismic changes in global supply chains. Goods manufactured in China, for example, were rerouted through other low-cost countries and regions (LCCRs). Global manufacturers began opening production facilities in Mexico and Canada to take full advantage of those nations’ favored trade status with the United States. As a result, reshoring and nearshoring activity peaked, only to ebb a bit, according to our latest Reshoring Index.
What happened?
Assessing the data from the 2025 Reshoring Index and drawing comparisons with the previous few years, a clear picture emerges. The post-pandemic urge to shorten supply chains drove back-to-back years of significant manufacturing gross output (MGO) growth between 2021 and 2023, thanks to sustained domestic manufacturing output and a decline in demand for imported goods from the 14 traditional Asian LCCRs. As a result, the Reshoring Index rose steadily to its highest level since its inception.
But once most of the latent US manufacturing capacity was absorbed, the revamped US manufacturing ecosystems struggled to scale fast enough to keep up with the growth of domestic demand because, even though investments continued to climb at a decent clip, it takes time to convert that capital into capacity. So, despite substantial investment in domestic production capacity, MGO has been virtually flat since early 2023.
Mexico, previously the major post-pandemic beneficiary of the shift from faraway manufacturing locations to nearby alternatives, remains a reliable partner in categories such as automotive and electrical equipment, where Mexico has established manufacturing expertise. But beyond these core sectors, the country faces infrastructure issues and other challenges to its ability to accommodate more overseas manufacturing, which are slowing its momentum as a go-to friendly destination.
As a result, in 2024, with both the United States and Mexico unable to turn on enough new manufacturing capacity for a variety of reasons, manufacturers reverted to sourcing from the more distant Asian LCCRs that they have historically relied on, and after consecutive years of continued momentum, the Reshoring Index faced its first significant drop in 2024.
Just a blip or the tip of the iceberg?
This decline raises fundamental questions about the sustainability of the upward trajectory of US manufacturing that we’ve witnessed in the post-pandemic years, and although it presents a reality check, the news isn’t all bad.
Indeed, looking forward, our executive survey that concluded in March of this year found a notable increase in corporate intent to build and expand US-based operations, with industry leaders continuing to prioritize strategic automation investments, AI-driven productivity enhancements, and innovative workforce programs to address persistent labor shortages and evolving skill requirements.
But more US manufacturing companies are recognizing that capital investments alone can’t guarantee success. The road to full realization of domestic production’s promise is still full of potholes, including persistent labor shortages, an aging workforce, and outdated perceptions of factory work being dirty and unsafe. This has created a wave of new strategies aimed at making manufacturing jobs more appealing, sustainable, and accessible to a broader range of American workers.
Across the United States, we see examples of manufacturing companies taking different approaches toward these goals, including the following:
- Intel (INTL). As a key beneficiary of federal investments in semiconductor capacity, the tech company has committed billions to build new production facilities in the United States and is attracting talent by expanding daycare benefits and launching apprenticeship and training programs.
- Advanced RV. This Ohio-based company has adopted a four-day workweek that maintains productivity while significantly improving employee morale and retention.
- Boeing (BA). This aerospace company has revamped its training and mentorship programs to fast-track skills development for new hires and stem the loss of institutional wisdom through retirements.
The fragility of today’s supply chains is also still an obvious problem. Only 5 percent of manufacturing executives that Kearney spoke with for the 2025 Reshoring Index said they were able to source all their raw materials locally. The situation is only somewhat better for semi-finished goods, with 28 percent indicating local supply can meet their entire demand.
When asked what they’re doing to become more resilient, 62 percent of manufacturing executives said they plan to adopt long-term strategies such as working closely with R&D to modify formulations to reduce dependence on specific suppliers. More in line with post-election events, 56 percent said they would implement reactive strategies such as hiring a tariff engineer to mitigate supply chain disruptions.
Ultimately, the success of reshoring hinges on a threefold focus on cost, talent, and resilience. While geopolitical shifts may fuel reshoring intent, execution depends on reducing persistent barriers through building out local ecosystems, automation, upskilling, and smarter workforce models.
What’s next?
If the 2025 Reshoring Index teaches us anything, it’s that the slowdown is not a failure. It’s a reality check.
The next phase of global manufacturing will be defined by hard choices about what to produce, where to invest, and how to compete in a fragmented, fast-moving world. And we all know that manufacturing ecosystems scale best when market and policy signals are strong and clear, capabilities are in place, and supply chains can flex and adapt with speed and confidence.
Image Source: DepositPhotos
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