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Government incentives drove a manufacturing reshoring boom. How tariffs are both fueling – and cooling – the trend.

Reshoring Initiative (RI) has tracked the announced plans of US companies to reshore manufacturing work since the early 2010’s. In its new 2024 summary and forecast for 2025, tariffs weigh heavily on company decisions. If you’re rooting for more domestic manufacturing, and we certainly are, the current tariff “strategy” is producing mixed results.

On the plus side, RI tracked 244,00 reshoring and ‘foreign direct investment’ (FDI)-announced jobs in 2024, down from the 2023 high of 349,000 jobs, but nevertheless a continuation of the strong momentum to bring work back onshore. Since 2010, RI has measured over two million announced jobs, and of those, RI estimates over 1.7 million have been filled.

Among US states, Texas was the top US destination in 2024, with 24,722 jobs announced in 125 cases, or 11% of the national total.

By way of industries and products, RI notes that “Significant growth continued in “essential product” industries in 2024. The Inflation Reduction Act (IRA) and other government incentives continued to support growth in Electrical Equipment, Appliances & Components and Computer & Electronic Products, driven by semiconductors, EV batteries, and solar, accounting for approximately 67% of all reshoring and FDI job announcements in 2024.” 

In fact, RI found that much of the rationale for reshoring and FDI in 2024 pointed to incentives: 

2024 Top Cited Factors: 

1. Government Incentives (736) 

2. Skilled Workforce (357) 

3. Proximity to Market (307) 

4. Supply Chain Risk (261) 

5. Impact on domestic economy (252)

But as Biden-era incentives wane, RI concludes that “reshoring and FDI are increasingly motivated by the threat and reality of tariffs. The number of firm cases citing Government Incentives as a factor in 2025* is down by 54% from 2024 while the number citing Tariffs as a factor is up 454%.”

RI forecasts reshoring and FDI-announced jobs to fall off significantly in 2025, to 174,000 jobs. So as much as tariffs are forcing US companies to site more work onshore, the flipside is that tariff uncertainty is dampening enthusiasm to add manufacturing jobs overall. Harry Moser, founder and president of Reshoring Initiative, notes in the report that, “Without a stable, long-term policy framework, companies are hesitant to make irreversible commitments to increased U.S. manufacturing." 

I asked Moser about a correlation between tariffs and RI’s lower 2025 forecast, and he confirmed that tariffs are likely causing a “slow down in the rate of reshoring”, that companies are “announcing plans that will only proceed when tariffs are firm.”

Moser favors a comprehensive industrial policy, to include “Incorporating a Value-Added Tax (VAT)” as a tool, as outlined in the report. I’d be more indelicate and say that tariffs are an important component of a new US industrial policy that picks US manufacturing “to win" -- but that also do no harm to US firms they're designed to help.

But until US companies have more certainty about what tariffs rates will be, and for what products and services, it’s evident from Moser (and others) that corporate leaders will be more hesitant to announce reshoring plans.  

Regardless of a short-term blip, it’s also likely that reshoring announcements will again resume at a torrid pace. Proximity to market, supply-chain risk, and impact on domestic economy – factors cited RI in reshoring jobs – are too compelling to ignore or not plan for. (We'll dig deeper into what's motivating both OEMs and contract manufacturers and review RI's most recent reshoring survey, in the weeks ahead.)

It’s also up to us to ensure that US companies have options when deciding to bring work home. Showcasing Houston manufacturers, as reshoring options, is core to what we do. More on progress next time.  

Bart Taylor is executive director of the GHMA and founder of InsideMFG. Reach him at [email protected]. 

Hughes Tool Company’s manufacturing legacy extends beyond Baker Hughes – and Houston – in the form of modern supply chains that promise growth

Howard Hughes Sr. and Walter Sharp, co-founders of the Hughes Tool Company circa 1910, would marvel today at their legacy in Houston. Not only does Baker Hughes carry on as a global oilfield services and equipment powerhouse (thank you two-cone drillbit), much of Houston’s industrial base continues to work on behalf of energy developers.

More, Hughes Sr.’s influence sustains throughout other important US manufacturing industries – including the aviation supply chain wrought by his son Howard Hughes Jr., who used profits generated by Hughes Tool Company to build airplanes, including the infamous Hughes H-4 Hercules, the Spruce Goose that “flew” in Long Beach harbor. As mixed (and spectacular) the results of Hughes Jr. 's aeronautics ambition were, today Southern California's formidable aviation supply chain endures. 

It’s a manufacturing story across the U.S., a tale of industry innovation fueling local and regional supply chains: energy in Houston, the Rust Belt’s automotive cluster, Seattle’s commercial aviation supplier base, ship-building in the mid-Atlantic, and biomed/pharma in Boston and San Diego.

Other modern supply chains support rocketry in Alabama, natural food in Colorado, craft beverage in Oregon, and coming soon, semiconductor in Arizona and central Texas, EV and battery in Georgia -- and more.

Here’s the upside: With more manufacturing reshoring, and U.S. domestic players consolidating production onshore, opportunity beckons for suppliers able to pivot to adjacent industries well-suited to their skill-sets and expertise.

I prompted ChatGPT to confirm the industry supply chains that represent opportunity for Houston’s opportunistic suppliers. Here’s the exchange:

You said:

What are the most common (other) industries served by manufacturers who sell to Oil and Gas?

ChatGPT said:

Manufacturers who sell to the oil and gas industry often have capabilities, technologies, and product lines that are applicable to several other sectors with similar needs for durability, precision, scale, and compliance. Here are the most common other industries they serve:

Other Industry with common Product/Service overlaps

1. 1. Chemical/Petrochemical: Tanks, valves, instrumentation, control systems

   2. Power Generation: Turbines, control panels, mechanical systems

   3. Mining: Pumps, crushers, conveyors, fluid and power systems

   4. Maritime/Offshore: Structural steel, mooring, marine safety, welding

   5. Defense/Aerospace: Precision machining, high-spec metals, electronics

   6. Automotive/Equipment: Castings, sensors, mechanical assemblies

   7. Medical/Pharma: High-precision metal parts, QA standards, stainless steel

   8. Food/Beverage: Sanitary piping, automation, thermal control

Conclusion:

Manufacturers serving oil and gas tend to build capabilities around heavy industry, regulatory compliance, and high-reliability equipment—allowing them to diversify into industries with similar technical and operational demands. 

It’s a good reminder: Industries with supply chains compatible with the skills and expertise that flow through Houston manufacturing are among those poised to drive growth across American manufacturing. Companies in Houston, south Texas, and elsewhere will do well to take note. 

We’ll help make new connections for our members.

Bart Taylor is founder of InsideMFG and executive director of Greater Houston Manufacturing Association. Reach him at [email protected]. 

Here's more from ChatGBT, on supply-chain compatibility: 

1. Chemical and Petrochemical

Why It Overlaps:

• Shared facilities and processes (e.g., pressure vessels, piping, pumps, compressors).

• Similar regulatory standards (e.g., ASME, API, OSHA).

• Manufacturers of valves, tanks, instrumentation, and heat exchangers often serve both.

2. Power Generation (Fossil, Nuclear, Renewable)

Why It Overlaps:

• Power plants (especially gas-fired and nuclear) require turbines, control systems, heat exchangers, and structural steel.

• Manufacturers producing mechanical and electrical components for oil and gas often sell to:

• Utility-scale solar and wind (foundations, transformers, control panels).

• Nuclear plants (precision machining, safety-grade components).

3. Mining and Mineral Processing

Why It Overlaps:

• Shared need for rugged equipment, bulk material handling, and fluid systems.

• Equipment such as crushers, conveyors, pumps, and gearboxes are common to both.

• Heavy-duty machinery, especially in drilling and excavation, has cross- applications.

4. Maritime and Offshore Construction

Why It Overlaps:

• Offshore platforms, vessels, and shipyards often use the same steel fabricators, electrical systems, and safety equipment.

• Common product categories: mooring systems, corrosion-resistant coatings, welding and fabrication services.

5. Defense and Aerospace

Why It Overlaps:

• Shared use of high-spec alloys, precision machining, and controls.

• Component manufacturers (e.g., sensors, hydraulic systems, bearings) often supply both.

• Especially relevant for companies with ITAR compliance or advanced QA systems.

6. Automotive and Heavy Equipment

Why It Overlaps:

• Suppliers of castings, forgings, sensors, and automation systems serve both.

• Tier 2/3 parts manufacturers often provide for multiple transportation and machinery OEMs.

7. Medical and Pharmaceutical Equipment

Why It Overlaps:

• Precision parts, stainless steel fabrication, cleanroom-compatible components.

• High standards for quality management (e.g., ISO 9001, 13485) can open doors across sectors.

8. Food and Beverage Processing

Why It Overlaps:

• While not intuitive, many tank, piping, and automation system manufacturers also serve this sector, using sanitary design standards.

• Similarities in fluid handling, temperature control, and packaging equipment.