Reshoring Wave Hits Reality: Where Manufacturers Are Actually Building Plants

The reshoring narrative has been building for three years now. Inflation Reduction Act subsidies, supply chain paranoia post-2020, geopolitical pressure on Taiwan semiconductors, tariff threats on Mexico and Vietnam. Every quarter brings new announcements: Toyota expanding in Kentucky, Intel committing another $20 billion to Arizona, Samsung doubling down on Texas. The Wall Street Journal runs the story. CNBC runs it again. The administration tweets it. But something crucial gets lost in the repetition.

Most of these announcements never become factories.

The gap between press release and concrete foundation is where the real story lives. Of the reshoring and nearshoring commitments announced between 2022 and 2024, fewer than 40% have begun actual construction or retooling, according to data compiled from the American Manufacturing Coalition and cross-referenced with county permitting records and industrial real estate databases. For operations leaders trying to understand what reshoring actually means for supply chain strategy, labor availability, or their own competitive position, the distinction matters enormously.

## The Announcement-to-Reality Gap

Reshoring announcements serve multiple purposes, and not all of them involve building new factories. A company announces a $2 billion investment in a U.S. facility and achieves several things simultaneously: it generates political goodwill (relevant when tariff discussions are happening in Washington), it stabilizes stock price, it signals to existing customers that supply chain risk is being managed, it buys time while the company actually figures out whether the economics work. Announcements are cheap. Factories are expensive, inflexible, and require three to five years of planning before the first dollar of capex gets spent.

Consider the timeline. A manufacturer announces a reshoring commitment in Q2. What actually happens? Due diligence begins. The company identifies potential sites. It negotiates with state and local governments for property tax abatements, utility rate discounts, workforce training grants. It evaluates real estate costs, labor availability, transportation infrastructure, and regulatory environment. It runs financial models. It conducts environmental assessments. It begins architectural and engineering work. If all goes well, a groundbreaking happens 18 to 24 months after the announcement. Construction takes another two to four years depending on facility complexity. So the announcement you read in 2023 translates to actual production capacity in 2027 or 2028, if at all.

What kills the deal? The answer tells you what actually drives reshoring decisions.

## Why Announcements Stall

Labor availability is cited as the primary constraint, but it is not labor cost. That distinction matters. A plant manager in the Midwest can hire skilled machinists at $28 to $35 per hour. That is not cheap compared to Vietnam or Mexico. But that is not why plants are not being built in those regions. The issue is that skilled workers do not exist in sufficient concentration in many potential U.S. locations. A new automotive parts facility needs 200 CNC programmers, 400 skilled maintenance technicians, and 600 general assembly workers. Phoenix has that depth. Central Pennsylvania does not.

This has reordered the reshoring map. Texas, Arizona, and the upper Midwest are concentrating new capacity because they already have manufacturing ecosystems with available labor. The Southeast, which has aggressively courted manufacturing investment for two decades, is struggling to land reshoring projects because the skills pipeline does not exist at scale. Alabama has won some automotive supplier expansions, but it has not won the high-complexity, high-skill factories that generate premium employment. Instead, it has won assembly operations that demand less specialized labor.

Real estate costs are the second major factor. Announcements often assume industrial land prices that no longer exist. Between 2020 and 2025, industrial real estate costs increased 80% in hot markets like Austin, Phoenix, and the San Francisco Bay Area. A company that announced a factory location in 2023 based on land prices in 2022 found itself unable to pencil out the economics when it actually went to negotiate property in 2024. This is not theoretical. Multiple semiconductor and battery facilities announced in Texas and Arizona have shifted to alternative locations or downsized projected capacity once land acquisition began.

Utilities represent the third constraint, and this one is less discussed but increasingly acute. A lithium battery manufacturing facility draws 150 to 300 megawatts at full production. A large semiconductor fab requires stable, redundant power delivery at that scale. Most U.S. regions cannot reliably provide this. Texas has capacity. Arizona has capacity. The Midwest has some capacity. Most other regions do not. Utilities are willing to invest in infrastructure expansion, but that requires two to four years of planning and hundreds of millions in capex that utilities pass through to manufacturers via higher electrical rates. This changes the cost-benefit analysis significantly.

## Where Reshoring Is Actually Happening

The facilities that have actually begun construction cluster in four regions: South Texas, centered around Corpus Christi and the Houston industrial corridor; Arizona, particularly around Phoenix and Tucson; the upper Midwest, specifically Michigan and Wisconsin; and scattered locations in Tennessee and Kentucky where automotive ecosystem density is very high.

South Texas has attracted petrochemical and fertilizer reshoring because it sits at the convergence of Gulf Coast infrastructure, natural gas pipeline access, and deep-water port capacity. Phillips 66, Exxon, and several specialty chemical companies have announced and begun actual construction of new and expanded facilities in the region over the past two years. These are primarily nearshoring projects: manufacturing for the North American market rather than reshoring from Asia.

Arizona has become the semiconductor and battery manufacturing hub, particularly after Intel announced its fab expansion, Samsung committed battery capacity, and TSMC began planning for Arizona production. The state has invested aggressively in workforce development, and it has utility capacity. Phoenix area unemployment is higher than the national average, which means skilled workers are available and sticky. Once one major fab began construction, it created an anchor that made locating suppliers and adjacent manufacturing viable.

The upper Midwest, particularly Michigan and Wisconsin, is consolidating automotive and precision manufacturing reshoring. This region already has deep manufacturing expertise, established supply chains, and unions that have negotiated competitive wage structures. New capacity here tends to be expansions of existing operations rather than greenfield facilities.

What has not happened? Broad-based reshoring to the Southeast or Midwest for cost reasons. Reshoring to low-wage regions. Reshoring driven primarily by tariffs or supply chain security. Instead, the actual pattern is selective reshoring to regions with existing manufacturing infrastructure, driven by market proximity (sell to the U.S. market rather than export from Asia) and operational capability.

## The Nearshoring Pivot

Nearshoring has quietly overtaken reshoring as the dominant strategy for companies reducing Asia dependence. Nearshoring means building factories in Mexico, Central America, or Caribbean locations that are within two days of U.S. ports and close enough to support just-in-time logistics. Capex is lower than U.S. reshoring. Labor costs are substantially lower. Supply chain risk is reduced compared to Asia. Regulatory burden is lighter than the U.S., though that is changing as Mexico strengthens labor and environmental standards.

This is where most manufacturing growth is actually happening. Automotive suppliers are building in northern Mexico and Guatemala. Electronics manufacturers are establishing facilities in Costa Rica and Mexico. Textiles and apparel are moving from Vietnam and China to Honduras and Guatemala. These facilities do not generate U.S. jobs, but they do reduce Asia-to-U.S. supply chain vulnerability and enable faster, more responsive production runs.

For operations managers evaluating supply chain strategy, this distinction is critical. If you are assessing China substitution strategy, assume Mexico and Central America, not the U.S. Midwest. If you are counting on substantial reshoring to improve U.S. manufacturing employment, the data does not support that trajectory at current capex rates.

## What Separates Real from Announced

A few hard signals separate genuine reshoring plans from announcement theater. First, permits filed. A genuine project has environmental permits, land permits, utility expansion applications, and occupancy permits in motion. Check county records. Second, workforce development funding from state labor agencies. A real project has the state investing in training programs, often 18 to 24 months before production begins. Third, equipment orders. Real factories have major machine tool, furnace, or semiconductor manufacturing equipment on order, which creates a hard delivery timeline. Check industry supply chain data. Fourth, incremental land acquisition or property lease. A company serious about building purchases or locks in property at market rates, not the speculative prices that sometimes appear in early announcement negotiations.

By these metrics, roughly 200 of the 500-plus reshoring and nearshoring announcements made since 2022 have moved into genuine execution phase. The rest are in negotiation, environmental review, or have stalled. That is not a failure of policy or investment. It reflects the basic reality that manufacturing expansion requires capital discipline, and capital discipline sometimes means walking away from press-release deals that do not pencil out.

For an operations leader watching this unfold, the takeaway is clear. Reshoring is real at the margins and in specific sectors. But it is not yet a structural shift in global manufacturing. Most high-complexity, cost-sensitive manufacturing still happens in Asia. U.S. capacity expansion is real but geographically concentrated and selective. Nearshoring is the actual growth story. And most announcements you read are not factories yet.