US Manufacturing Needs Pro-Growth Policy and Time

U.S. automotive manufacturers were caught by surprise when fuel prices skyrocketed in the 1970s. In the wake of those higher costs, many Americans jettisoned their gas-guzzling vehicles in favor of smaller and more fuel-efficient vehicles produced by Japanese automakers. 

Yet there was more at play than just shifting consumer demand. Japanese manufacturers ushered in the era of lean manufacturing, too. This new approach to large-scale manufacturing of vehicles transformed the supply chain with “just-in-time” production, which freed up working capital to be efficiently redeployed. 

It took time for the U.S. manufacturing sector to respond. However, they learned from this changing landscape, evolved and came back even stronger.  

Years later, globalization again reshaped supply chains, but with a more profound effect. Today, international competitors manufacture goods at a speed and scale that dwarfs that historical example. 

Can U.S. manufacturing continue to grow a competitive position on the global stage? There’s little doubt that the manufacturing sector can if the right policies are in place to enable that growth.   

How can I be certain? I hear that determination from manufacturers every day. The association I lead, MEMA Aftermarket Suppliers, represents the manufacturers of the parts, tools, chemicals, diagnostics and technologies that keep our vehicles running safely and reliably across their lifetimes. It’s the foundation of the automotive aftermarket supply chain. 

A Market Much of America Unknowingly Depends on

The automotive aftermarket accounts for $435 billion in annual consumer spending in the U.S., according to a joint forecast by MEMA Aftermarket Suppliers, Auto Care Association and S&P Global. It employs nearly 2% of the overall U.S. workforce. Most importantly, it keeps the 291 million vehicles Americans own running safely. 

This is no small feat. The average age of a privately owned vehicle in the U.S., including light trucks, is 12.8 years and climbing. Each vehicle has upwards of 30,000 unique parts. Since there is a wide variety of models on the road, that amounts to billions of parts that navigate a complex supply chain every year.    

The auto aftermarket is a crucial logistics network Americans unknowingly rely on for their vehicles to meet their most critical transportation needs. This is particularly true in areas of the country that do not have a mass transit system. In fact, some 93% of commuters do so in a privately owned vehicle, be it their own vehicle, a ride-hailing service or a carpool.  

Four Policy Changes Necessary for Reshoring 

Research and development (R&D) are central to investment in innovation. Most modern industrialized countries permit businesses to immediately deduct such investments. Unfortunately, the U.S. departed from this practice over the past few years. It transitioned to a longer-term amortization policy that left manufacturers ill-equipped to compete on a global stage. 

The recently enacted One Big Beautiful Bill Act (OBBA) re-instituted the R&D first year expense provision and made it permanent. This provides manufacturers with a level playing field necessary to invest in growth. It’s a win for U.S. suppliers, along with the thousands of people employed in our manufacturing sector. 

Even so, there’s still work to do. Here are four policy changes manufacturers tell us they need to effectively reshore operations.  

1. Long-term certainty in trade policy 

U.S. manufacturers are highly competitive and entrepreneurial organizations. For example, one-third of our membership consists of small- and medium-sized businesses. In countless private meetings, facility tours, surveys and annual events like the Automotive Aftermarket Products Expo (AAPEX)—where 45,000 attendees from 128 countries meet to do business—their feedback boils down to one phrase:

“Tell us the rules of the game, and we'll figure out how to win.” 

In other words, they need certainty to plan for reshoring. 

Manufacturing is a capital-intensive business. Moving operations can easily take three to five years and many companies will not see a return-on-investment (ROI) for a decade. They cannot plan or access the capital they need to orchestrate those plans, without a predictable trade policy.  

2. Tariff reprieves for equipment and raw materials

Manufacturers in the U.S. often require equipment, raw materials or critical inputs that only can be sourced from other locations. These items are essential for domestic manufacturing operations. Tariffs on these items can impede reshoring initiatives. Manufacturers need a reprieve from these unintended consequences in order to make reshoring a reality.

3. Broad regulatory reform

Many regulations stem from good intentions, but the complex tangle of rules and requirements an average company faces has become overly burdensome. For example, a 2022 study conducted by the National Association of Manufacturers put the total cost of regulatory compliance—across financial, environmental, tax and occupational safety—at $12,800 per employee. In effect, compliance today is more about paperwork and less about outcomes.  

Permitting is another illustration. Manufacturers often need permits from as many as 13 different federal agencies to open a new facility. These are in addition to the permits required by state and municipal authorities.  

To be clear, we support the highest environmental standards. Clean and sustainable manufacturing is a rallying cry among manufacturers. However, we’ve just made it too hard to build things in the U.S., and that must change if we want to reshore operations.  

4. Workforce development 

There are good-paying jobs in the manufacturing sector right now that employers cannot fill. One of the root causes of this problem is perception.  

These jobs conjure a mental image of dirt and grime of historical plants, but that perception is just not true anymore. Manufacturing facilities are clean, highly automated and emphasize safety. Moreover, employees in the industry have an opportunity to work on cutting edge technologies and new developments that will reshape the future of mobility. 

A related challenge is providing the education necessary for these jobs. Modern manufacturing is high-tech and requires vocational training or technical two-year degrees. These students do not have the same guidance or access to financial aid afforded to a traditional college-bound student.  

The recently passed OBBA included several key provisions that the manufacturing sector is grateful for. Among them are protecting Pell Grant eligibility for qualifying short-term, job-ready technical education programs. It also expanded 529 savings plans to cover job training, licenses, and certifications essential to both manufacturing and technician careers. 

What manufacturers still need is strong federal efforts to ensure students are aware of these pathways. The future workforce needs to recognize these as attractive, high-quality career options, and understand that support is available to help them pursue these opportunities. 

Patience, Policy Key to Investment

Our current supply chain, which feeds manufacturing with the inventory needed to build products, has been 35 years in the making. In the automotive aftermarket, there’s a good reason to be smooth and deliberate: The quality, complexity and safety of auto parts mean shifts in production must be methodical—and that will also take time.  

We need pro-growth policies that give manufacturers the confidence to invest, along with realistic expectations as to how long investments will take to execute. If we can do these things, manufacturing in the U.S. will be more competitive and yield economic benefits that strengthen our country. We’ve done it before, and we can do it again.