Podcast: How manufacturers are managing risk in an era of everyday disruptions and instability
Key Highlights
- Manufacturers are shifting from reshoring alone to diversified global production strategies.
- Workforce development and community colleges are critical to modern manufacturing growth.
- Semiconductor, pharmaceutical, and plastics sectors are leading new U.S. manufacturing investment.
- Constant disruption from tariffs, wars, and supply shortages is now the manufacturing norm.
In this episode of Great Question: A Manufacturing Podcast, Thomas Wilk meets up with Rosemary Coates of the Reshoring Institute to catch up on how current events are impacting manufacturers who were already shifting their reshoring strategies. Despite geopolitical conflict and energy shortages, Coates identifies are few sectors that are thriving (semiconductors, pharmaceuticals, and plastics) and emphasizes the importance of community colleges in preparing workers for a new, more volatile manufacturing normal.
Below is an excerpt from the podcast:
Thomas Wilk: I don't know how we're going to cram it all into about 15, 20 minutes, but we're certainly going to hit the high points. If I could refer to our last conversation, which was in July 2025, maybe we can start with the topic of business uncertainty. You said back at last July that your institute had just finished interviewing 18 C-level executives, all of whom had said that due to business uncertainty, "they were doing nothing. They were making no investments, they were not opening new factories, they were not hiring – nothing until the economy stabilized a little bit."
So here we are, Rosemary, May 2026. Has anything changed in 10, 11, 12 months?
Rosemary Coates: Yeah, everything changes every day just about these days. First of all, the IEEPA tariffs that Trump had placed on various countries and various levels were declared illegal on February 20th. And then on February 21st, he instituted the next set of tariffs, I think (Section) 201 tariffs, and they are now at 15% across the board on countries. So there's some stabilization in terms of the percentage but we know that those are only good for 180 days. They will also likely be declared illegal because that provision is related to the balance of payments, it really doesn't have anything to do with tariffs, so he's using it in a way that is probably illegal again.
However, in the background, he's put the Department of Commerce to work to develop again the (Section) 301 tariffs, which were the original in Trump 1.0 back in his first term, that were penalty tariffs against specific countries. And in order to put those in place, each country has to be evaluated to determine how they are mishandling, I guess, trade. And then once they've declared those facts, then they can put tariffs back on those countries. So there's kind of a stable period right now, but then I think we're going to see the same ups and downs that we saw in the past.
So how are companies responding to that? That's the big thing is, you know, the cost of tariffs and I think there's in this period now, there's companies that are evaluating how to respond and what to do. As I told you back a year ago, everything was on hold. Companies were waiting to do investments. But business moves forward. There's a lot of pent-up demand and they can't wait forever, so I think companies at this point are starting to reevaluate and move forward with investment.
But we can see over the last year, the increase in manufacturing jobs in the U.S. has been completely flat for a year. So there was kind of nothing happening, there was no investment, no hiring, and it was very lackluster in terms of growth, but hopefully that we're going to see some growth this year.
TW: You mentioned that the executives were talking about making a lot of plans for the future, that the one thing they were doing was staying busy making Plan A, Plan B, and Plan C for what would happen once the time was right to act. And I'm going to quote you directly again because I think your words were prophetic here. "Because of the instability of the world right now, you never know when a new war is going to break out or a new pandemic or something, so you need to have a lot of alternate plans."
Once again, here we are, right? There's a conflict between the U.S. and Iran, among other countries, and that's going to affect the access to petroleum, the price of petroleum, which, of course, impacts a whole lot of the plastic supply chain at the very least. How, in your experience, are the companies you talked to responding to this specific event? Are they still putting things on hold, or are they just figuring they're going to do the best they can?
RC: That's a good question, but it was kind of a surprise that we're now in another war, this time really major in terms of cost and effect overall on the economy.
So, how are companies dealing with it? It's yet another disruption, and I think at this point, companies are kind of settled into the thought that it's going to be constant disruptions. If it's not another war, a new set of tariffs, a new change in geopolitics, it's going to be a natural disaster or something. And so instead of saying, we're waiting around until things get normalized, it's how do we plan for all this disruption in our supply chains and our global manufacturing strategy?
What we're seeing now is that instead of companies simply reevaluating reshoring, they're thinking beyond reshoring. So it isn't just, you know, let's bring some stuff back to the U.S. to make it, but how do we move to the thought process for global manufacturing? How do we de-risk the supply chain by putting manufacturing in multiple areas?
We may have talked about a China +1 strategy or China +2 strategy where it may keep some manufacturing in China, bring some back to the U.S., put some in Mexico, maybe another Asian country, so that you even that risk across the world and are looking at alternative places to manufacture should one or another region be affected. Of course, as you know, the Strait of Hormuz being closed has pinched the global petroleum markets, and petroleum downstream is used for all kinds of things. It's the basis for asphalt, for plastics, for specialty chemicals that are used in all kinds of products, cosmetics, and all sorts of consumer products. Natural gas has been affected. And what's happened in the Middle East is it's not just a matter of we're waiting and all of a sudden the floodgates are going to open and it'll be okay. There's no oil production going on at the moment because there's no place to store the oil.
These refineries in the Middle East are shut down, and if and when the strait opens – and I would say it's probably later than sooner that that will happen – there is storage and some oil is going to move through the Strait, but because they haven't been producing oil, there's going to be shortages for a long time. So, I mean, it's this situation where there's so many unknowns, and businesses have to plan alternative strategies to address what might happen.
TW: Interesting. We have a core audience of asset management professionals and it occurs to me there's probably a lot of activity right now over in the Middle East among companies like Saudi Aramco who are taking advantage of this to run through their reliability programs and check out all the assets, and do all the repairs they've been putting off or they've been able to put off until a pause like this occurs.
RC: Yeah, that's a really good point, and maybe that will increase production at some level, but it's not going to repair the shortages quickly. That's going to take some time. It's not going to happen all at once. It'll take months, maybe years even, to get back up to the levels that we were expecting.
And of course, things like plastics, I mean, plastics are used in everything, not just manufacturing, but just consider going to the grocery store and think about any products that are not in plastic. I mean, everything is in plastic – plastic clam shells, plastic wrappers, if you go buy bread, it's in plastics. If you are in the produce aisle, you're going to put your oranges in a little plastic bag that they give you, right? I mean, this is a big problem. If we have a plastic shortage, we're going to see increased prices and shortages all over the place. So, I mean, these are big deals.
Another example is fertilizer. So ammonia is a basic part of the development and production of fertilizers. I was in Fresno, CA last week, that's the Central Valley of California, where about 40% of the nation's fruits and vegetables and nuts come from. So 40%, almost half of all the fruits and vegetables and nuts that we consume are produced there. Of course, they need fertilizer for their crops, and people are beside themselves in the agricultural community trying to find alternatives for fertilizer. It's very expensive now, that means that it's going to be more expensive to farm, which will mean it's going to be more expensive for those fruits and vegetables. So this is all the parts of supply chain that are complicated. There are big effects and big swings. There's all kinds of churn going on. And then we have to, I think, in supply chain and manufacturing, learn to live with that because that's the norm, not steady-as-you-go as we were kind of used to in the past.
TW: If I could shift gears a moment to the kinds of factories that are opening in the US right now. I did talk to someone in February, Justin Baucum of Isembard, about his role in building smaller, more modular factories in the U.S. One of the reasons he was excited about working for Isembard is because he could help contribute to reshoring efforts, and these factories, he described them as “machines running in facilities, cutting metal.” I mean, they all start as four walls and a CNC machine or a mill, and then grow as needed based on the kind of contracts they get. I was curious to know if you had seen this trend or had seen larger greenfield trends of the smaller, more nimble plants coming back, given how tough it is for maybe bigger players to invest in massive facilities these days.
RC: Yes and no. Right now we're working with a machine shop south of San Jose, a pretty big one, and I'm familiar with that kind of operation and the issues that they go through. The biggest problem with those kind of machine shops is idle time, where they have invested in these big machines to do all kinds of metal work, and if they don't have regular customers, there's a lot of idle time with those machines. That's probably the biggest issue in those shops. Small factories, maybe 200 people or less, are kind of the backbone of U.S. manufacturing, in fact.
One of the big problems we've got, though, and I hate to be Debbie Downer here, but we have a lot of problems to be solved in manufacturing. I spoke to an investment banker in the energy sector a couple of months ago. He's in the investment sector and investing in new kinds of energies and reestablishing the grid and so forth. And he said to me, even if we brought a lot of the manufacturing back, we do not have the energy infrastructure to support it. So we can build 1,000 factories, but if there's no electricity, we can't run them. That was kind of eye-opening for me. He had read something that I wrote and he said, get a grip here. We can't bring all this manufacturing back if we don't have the electrical infrastructure.
And it's not that we can't in the future. There's a lot of building going on, there's certainly funding under the CHIPS and Science Act to assist, and the Infrastructure Act. But it's not going to happen overnight. It'll be 10 to 15 years before we're in a position to really add a lot of factories. So yes and no. We're going to see these little factories, that's probably the growth area, yes. But, you know, we like to say manufacturing went out like a tsunami and it's coming back in raindrops. So that's what we're going to see a little bit here and there.
More importantly, it's more of a worldview and setting up factories around the world is probably the most popular, particularly Mexico. We're seeing a lot of growth in Mexico.
TW: That actually seems to fly against some of the rhetoric we've heard about putting American factories first. Is this the kind of thing where the political landscape is open to this idea, where you can put new facilities in North America, if not the U.S.?
RC: Well, I think, you know, that's the right idea. And of course, we're the Reshoring Institute, so we'd like to support that as much as we can. But reality is that we don't have the infrastructure where we don't have the workers. Our workforce, while there are people out of work, they don't have the right skills.
My grandfather worked at Halsey Taylor in Warren, OH. He was a metal worker. And he used to come home and he was gross and dirty and he smelled, and he'd want to give me a hug and I'm like, no, no. That's what manufacturing was in the past. Today's manufacturing – and I live in Silicon Valley, so if you go to a manufacturing site here, you’ve got to get in a bunny suit and you have to you have to be careful about particle release in the manufacturing site, and it's full of machinery.
The workers today have to have a different kind of skill set. Instead of putting pegs in holes, the workers need to know how to run a robot that puts pegs in holes, right? So running a robot or repairing a robot or moving along inventory by a computerized method, inputting information in a computer, that's much more today's factory than it was in my grandfather's time. My poor grandfather wouldn't have survived today because he didn't have the skills. You know, we have people out of work, but they don't have the right skills. They can't program a machine tool, they don't know how to run a computer to test for defects, that kind of thing.
So I think we need to focus on education, number one, and that's today being filled by community colleges. Educating the workforce so they have the right skills to go into manufacturing is very key, as well as the investment in these in these small factories and infrastructure.
TW: We're lucky here in Chicago to have the people at MxD who are helping drive the educational mission throughout all of our community colleges too. There's a real effort, at least in this city. I know plenty of other cities too, but MxD has been doing some really interesting work out here with smart manufacturing.
RC: Yeah, a lot of community colleges have taken that step. A lot of manufacturing jobs are kind of a crossover between say, a high school education and a full-blown engineer. So they're somewhere in the middle, and community colleges are perfect for filling that gap. They can teach some advanced skills. They can teach mathematics, which are essential for manufacturing. You know, manufacturing is always dealing with planes and angles, and you have to have a math background to do manufacturing today, and yet they're not all the way to a full blown engineering job. So providing that kind of education in the middle, I think is perfect. That's where we need to really focus effort and funds, we need to fund that kind of education so that we're building the workforce of the future.
TW: We'll get you out of here in this one. I want to go back to your comment about tsunamis and raindrops. The question is, which sectors, given the raindrop effect, do you expect U.S. manufacturing to grow in over the next 18 months? Are there specific verticals? Are there areas where you're seeing activity starting to happen?
RC: Based on the development, and a lot of it has to do with funding also – it's really hard for companies to just come up with a billion dollars to build a new factory. The funding under both the Infrastructure Act, which has got a lot of earmarked funding for green energy development, all kinds of infrastructure there, and things like charging stations and that sort of thing; and the CHIPS and Science Act, which has a lot of funding for advancement in manufacturing in different ways. That is really important, it's just really hard for companies to come up with that kind of funding.
So as a result, the growth sectors that we're seeing are definitely semiconductors. And I don't mean just the big fabrication plants, those are being built in Arizona, New Mexico, Texas, Idaho, Ohio, New York. So those big manufacturing plants that cost $10 billion and a lot of machinery and so forth, that's one thing. But there's an entire supply chain that supports that. So there's construction workers, there's materials, there's semiconductor design, there's a whole entire supply chain. Funding at the top level affects everyone downstream, so that's really good, we're seeing growth in that area.
We're also seeing growth in pharmaceuticals, which as you can imagine is very automated, on things like over the counter drugs like aspirin and analgesics and that kind of thing. That's all fully automated, and so the kind of skills that are needing and needed in growth are once again, those in-between skills, not quite a full engineer to go into are manufacturing, but not just an unskilled laborer out of high school either. So there's somewhere in between. So pharmaceuticals, another area.
Surprisingly, plastics. Molds, I think, are still being made overseas because they're so expensive. And you can buy a plastic mold for a tenth the cost in China than you can in the U.S. just because they're really expensive to make. But the final production using that tool is very regionalized in the U.S., and you'll see plastics manufacturers coming up all over the place because of that.
As you mentioned, machine shops, they've always been local and regional, they serve the local economy, so hopefully we'll see redevelopment of some machine shop environments. But that's another one where I think the model's got to change, where shared time to avoid idle time with that machinery, maybe shared between three or four factories, a different business approach as a result of that.
Yeah, that's true. And once again, you've got to think about living with everyday disruptions and instability, instead of waiting around and twiddling your fingers till things are back to normal. They're never going to be back to normal. You always are going to have to plan for disruption these days.
TW: Well, I've got three teenagers in my house, and so we're living with emotional volatility and disruption on an hour-to-hour basis, so I can relate to a lot of this.
RC: That's exactly the way it feels in the manufacturing world too, yes.
About the Podcast
Great Question: A Manufacturing Podcast offers news and information for the people who make, store and move things and those who manage and maintain the facilities where that work gets done. Manufacturers from chemical producers to automakers to machine shops can listen for critical insights into the technologies, economic conditions and best practices that can influence how to best run facilities to reach operational excellence.
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About the Author
Thomas Wilk
editor in chief
Thomas Wilk joined Plant Services as editor in chief in 2014. Previously, Wilk was content strategist / mobile media manager at Panduit. Prior to Panduit, Tom was lead editor for Battelle Memorial Institute's Environmental Restoration team, and taught business and technical writing at Ohio State University for eight years. Tom holds a BA from the University of Illinois and an MA from Ohio State University