- Morgan Stanley has estimated that bringing manufacturing back to the US could add $10 trillion to the economy.
- The bank pointed to a 20-year stagnation of the industrial economy as manufacturing was sent offshore.
- The recapitalization could particularly benefit “high-tech” sectors, the bank said.
The US economy could unlock trillions in value over the next decade if more manufacturing activity returns to the US, according to Morgan Stanley.
After decades of being sent overseas, domestic manufacturing is beginning to return to the U.S., the bank said, a phenomenon known as restoration.
If domestic production continues to grow, the economy could be worth up to $10 trillion over the next decade, according to the bank’s multi-industry analyst Chris Snyder.
“After decades of offshoring and reliance on international supply chains, the pendulum is swinging back toward domestic manufacturing,” Snyder said in a recent speech. episode For Morgan Stanley’s Thoughts on the Market podcast.
“In fact, we believe that the US is entering the early stages reindustrialization — a multi-decade opportunity that we measure at $10 trillion and believe has the potential to restore growth in the US industrial economy after more than 20 years of stagnation,” he added.
It the manufacturing sector continued to shrink in September, when activity declined for the 22nd of the past 23 months, according to the Institute for Supply Management.
However, the sector is showing signs that the US is pulling back from offshore manufacturing. The U.S. international trade deficit in goods and services fell to $70.4 billion in August, down $8.5 billion from the previous month. Department of Commerce.
Meanwhile, the Biden administration has poured billions into it push to increase chip production in the US and promote production and industrial sectors. As of February this year, annual investment in new manufacturing facilities reached a record $225 billion. memorandum by the Senate Joint Economic Committee.
New technologies such as artificial intelligence and more advanced robotics and automation are expected to drive manufacturing to the U.S., Snyder said. That could be good for US “high-tech” sectors, he later added, pointing to the semiconductor, pharmaceutical and advanced manufacturing systems industries.
Traditional industrial companies such as the automotive and aerospace sectors and companies investing in more sustainable manufacturing are also expected to benefit from the restructuring change, he added.
“Overall, these businesses should see shorter supply chains, reduced legal and tariff costs and a more flexible operating structure.”
The cumulative effects could be “quite profound” on the U.S. economy, Snyder said, with a boost to industry and manufacturing likely to boost GDP. The renegotiation could also potentially eliminate U.S. trade deficits with other economies, Snyder said.
“The US, with its strong technology sector and innovation ecosystem, is uniquely positioned to use technology to revitalize its manufacturing base,” he added.