Future Cities
Meet in the Middle
By Seth Martindale, Senior Managing Director, Americas Consulting, Location Incentives
August 23, 2024 5 Minute Read
It’s time for U.S. manufacturing and communities to find common ground.
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Learn MoreWhen I started in site selection 20 years ago, the U.S. led the world in manufacturing. Beginning about a decade ago, China moved ahead, with economic and political effects worldwide.
Over the years, I’ve seen time and again how much it matters where industry chooses to locate—and not only globally. In cities and towns across the United States, manufacturing has the power to shape the future.
And just as the where of site selection has changed, so has the how.
The elements we considered when selecting sites used to be more straightforward: labor force availability, labor costs and operating expenses. Those factors favored offshoring, and for years, offshoring reliably met most businesses’ needs.
Then the pandemic threw a wrench in supply chains, and geopolitical tensions added complications. Equipped with data on every aspect of manufacturing and the supply chain, companies started to think about reshoring, as offshoring put at risk the just-in-time delivery imperative.
And today, both the public and private sectors should be—and in some cases are—fast-tracking the return of manufacturing stateside.
However, several factors are stalling the effort.
First, infrastructure is falling short. Power, gas, water—so much of what manufacturing needs—is in short supply. Likewise labor is constrained, as an aging and shrinking labor pool creates skilled-worker shortages and drives up wages.
At the same time, government incentives can be more difficult to secure, with higher qualifying thresholds. And NIMBYism is a longtime obstacle. People say they want U.S.-made products and next-day delivery—but they don’t want to put manufacturing or distribution centers in their communities to allow for that.
But America has what it takes to bring U.S. manufacturing home.
First, we have size in our favor.
U.S. annual GDP totaled $28.26 trillion in Q1 2024, 50% more than that of either the European Union or China, according to the U.S. Bureau of Economic Analysis and the International Monetary Fund.
The U.S. manufacturing sector, representing nearly 16% of global manufacturing by most estimates, is second only to China and is more than double third-place Japan. The U.S. is home to 3.9 billion sq. ft. of manufacturing space, about 20% of the total U.S. industrial market.
And we have government investment.
The federal government is putting serious money—almost a trillion dollars—into U.S. manufacturing. The CHIPS and Science Act is doing what the acronym suggests: Creating Helpful Incentives to Produce Semiconductors.
And the IRA—the Inflation Reduction Act—is funding needed infrastructure like bridges, roads and energy. The money is there to help make U.S. manufacturing work.
Most important, we have smart, determined people in our industry.
After all, some of the most important bridges aren’t the literal ones the IRA funds. They’re the figurative bridges that connect communities, and no one builds them better than real estate professionals.
We have connections with state and local business leaders. We have connections with global businesses. We have connections with investors around the world. Through those connections, we can open the way to opportunity in communities across America.
Together we can find common ground for manufacturing and cities to thrive.
America is great at making money, but we’re also great at making things—and the most valuable thing U.S. manufacturing makes is strong communities. It’s time to update the stale site selection model and seek out places where public interests and private money can meet in the middle.
By looking at site selection in a new way, we can find common ground where both manufacturing and communities thrive.
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