U.S. factory resilience could take $2 trillion, McKinsey leaders say
McKinsey executives say replacing the most exposed manufactured imports would require far more capacity, skills, energy and infrastructure.
By Maya Lindqvist · Senior Technology Correspondent
3 min read
The United States may need roughly $2 trillion in new manufacturing capacity to remove its most serious trade vulnerabilities, according to McKinsey leaders Eric Kutcher and Shubham Singhal. Their estimate points to the scale of any effort to make the industrial base less exposed to geopolitical strain and concentrated supply chains.
Kutcher, McKinsey & Company’s chair for North America, and Singhal, a McKinsey senior partner and chair of the McKinsey Global Institute, wrote in Fortune that the U.S. imports about $3 trillion in manufactured goods each year. They said a meaningful share of those imports carries at least one risk: importance to national security, dependence on a small number of suppliers, or sourcing from countries that are geopolitically distant.
According to the McKinsey executives, one-quarter of imported manufactured goods face at least two of those risks. About 5% fall into all three categories, with the most exposed group concentrated in computers, electronics and key materials such as rare-earth magnets.
How much production would have to rise
McKinsey said it reviewed 5,000 products across almost 350 industries to measure how much U.S. output would need to grow to replace imports. The firm called the measure a “ramp-up factor.”
For products with a factor below 1, existing U.S. capacity could in theory cover imports if factories ran at higher utilization. Kutcher and Singhal cited aircraft as one example. Across those categories, McKinsey estimated that greater use of existing plants could add $660 billion in output, about half the trade deficit, assuming producers had buyers for the extra supply.
That approach would not address the most sensitive categories tied to future economic growth, the McKinsey leaders said. For about half of goods such as semiconductors and data center servers, they wrote, U.S. production capacity would need to rise fivefold or more.
Capital is only one constraint
Kutcher and Singhal said a $2 trillion investment requirement is large, but comparable in scale to earlier U.S. capital buildouts, including liquefied natural gas and recent AI-related projects. They said those efforts advanced when business incentives lined up with national priorities.
They warned that financing alone would not be enough. The effort would also require specialized workers, adequate infrastructure, available energy and projects ready for construction.
Some U.S. sectors, including electronics and aerospace, have expanded over the past year, according to the McKinsey executives. They said foreign direct investment suggests new capacity is being added in semiconductors and batteries, though overall investment outside FDI has not yet shown a sustained surge.
McKinsey said manufacturers do not need to wait for new plants before reducing risk. The firm pointed to broader sourcing across trading partners, redesigned supply chains and worker training for automation as steps companies can take now.
Kutcher and Singhal said AI and advanced robotics would be central to any new manufacturing push. They said future plants may use fewer workers in some jobs, require more skilled employees in others and operate with systems that more closely combine digital tools with physical production.
The U.S. remains the world’s second-largest manufacturer, though its share of global manufacturing has declined for decades, according to the McKinsey leaders. They argued that a stronger industrial base would depend on new technology, different skills and coordinated work on energy, permitting, workforce development and supply-chain visibility.
This story draws on original reporting from Fortune.