A Brave New Era for Development

The structural barriers facing U.S. industrial growth

The U.S. is entering a new era of industrial development. Decades of offshoring have left critical supply chains exposed — from rare earth minerals (85% of which are now processed in China) to food, fertilizer, and materials. As global trade dynamics shift and highlight these vulnerabilities, the U.S. must confront a hard truth: revitalizing domestic industry requires bold, systemic reinvestment.

Several structural and policy challenges continue to hamper reshoring efforts and require the intervention of innovative businesses alongside government to solve. Addressing these gaps will determine if the U.S. can transform industrial vulnerability into renewed strength.

1 - Power infrastructure gaps

Growing power demand—especially from data centers—is colliding with aging and overloaded infrastructure. By 2040 U.S. demand is expected to grow 35-50%, requiring trillions in capital investment for generation and battery capacity. Much of the distribution grid is reaching the end of its 50-year lifespan, with an estimated $2.0 trillion needed for replacement within a decade. Grid interconnection wait times can now stretch 5-10 years and are compounded by shortages in critical equipment like transformers (80% foreign-sourced). While nuclear SMRs and renewables offer long-term potential, they fall short on near-term practicality.

2 - Uncompetitive cost structures

U.S. manufacturing continues to face steep CapEx and OpEx pressures. Energy costs alone rose 15% after 2023, totaling $86B driven by the growing national demand. Volatile supply chains and rising interest rates have hampered new industrial developments that lack public support. In the next year manufacturers expect raw material and input costs to rise 5.5%, the highest level since early 2022.

"Rising costs are manufacturers’ top challenge in 2025." – Chief Executive 2025 Manufacturing Survey

3 - Labor shortfalls

The past 30+ years of underinvestment and offshoring have eroded the U.S. manufacturing talent pipeline. Workforce limitations persist as unemployment stays low (4.2% in April 2025) and immigration remains tight. The U.S. faces a projected 2.1M manufacturing job shortfall by 2030 and still lags in automation adoption due to the upfront capital and power requirements—deploying only one-third the industrial robots of nations like South Korea.

4 - Outdated policy

For the past 50 years, the U.S. has operated without a cohesive industrial policy, in contrast to nations like China with its Belt and Road Initiative securing global infrastructure and supply chains. U.S. industrial efforts have been hampered by inconsistent policies that prioritize short-term gains over systemic competitiveness and frequently change with each new administration. This lack of unified strategy has already resulted in the weakening of key supply chains, leaving the U.S. vulnerable to supply disruptions.

The path forward

As the United States stands at the threshold of a new industrial era, the path forward requires more than incremental changes or temporary fixes. Sustainable industrial growth demands public-private collaboration to address fundamental barriers in infrastructure, power, economic development, and policy. Governments must implement targeted industrial efforts alongside companies that connect energy solutions with manufacturing processes and align workforce development with production needs. The most valuable industrial players will address foundational challenges rather than exploit temporary conditions, creating resilient models that succeed regardless of policy shifts.

Coming next

In our next post we will explore some of the potential innovations that can address these hurdles.—and discover a blueprint for the future of U.S. resilient manufacturing.