Unlike previous cycles dominated by a few government-incentivized mega projects, the current increase in US manufacturing investment is characterized by a high number of smaller announcements. This indicates the trend is driven by fundamental economics, not isolated incentives, suggesting greater durability and a more sustainable, widespread industrial shift.
The ongoing wave of investment in automation and upgrading existing US facilities is not the end goal. It's the first step for companies recalculating supply chain costs due to tariffs. This "brownfield" optimization proves the economic viability of US production, paving the way for larger "greenfield" projects once existing capacity is maximized.
Contrary to traditional economic cycles where high demand prompts capacity expansion, the current driver is tariff mitigation. Companies are investing in US production to avoid import costs, a motivation that doesn't require a strong consumer goods market. The existing $1.2T trade deficit provides the "demand" to be recaptured domestically.
North American Producer Price Index (PPI) is rising while it falls in other global regions. This indicates US-based factories have stronger pricing power and better returns, making the US a more attractive location for future factories. As the speaker notes, "price drives returns and supply is going to follow returns."