Factories aren't coming back: Why Trump's 'manufacturing golden age' is losing steam

Manufacturing construction spending falls 16% even as 84 companies pledge $900 billion in investment; automation and AI limit job gains even where factories do return

An aerial view of a gas processing facility in Mentone, Texas. [Getty Images]

By Seo Ji-yeon, The Herald Business

"We will usher in a golden age of American manufacturing."

That was one of Donald Trump's signature campaign pledges when he returned to the White House — sharply raising tariffs, pressuring companies to invest in domestic production facilities and promising to bring back factories that had moved overseas.

Corporate investment announcements have kept coming. But factory construction and manufacturing employment figures are moving in the opposite direction from what the administration had hoped, raising doubts about whether Trump's much-touted "manufacturing revival" is gaining real traction.

According to the Financial Times, private-sector manufacturing construction spending in the United States came in at $15.2 billion in April — down roughly 16 percent since Trump began his second term.

Manufacturing jobs fell by 77,000 over the same period.

Corporate investment pledges, meanwhile, have only grown louder. Since January, 84 companies have announced plans to invest more than $900 billion to expand manufacturing in the United States, according to FT data.

But a wide gap separates announced investment from actual spending.

"An announcement is what a company says it's going to do; actual expenditure is where the money goes," said Didi Caldwell, CEO of Global Location Strategies, a factory-siting consultancy, told the FT. "It's hard to say a manufacturing renaissance is happening in the United States right now."

A BNSF freight train travels along a track in Larkspur, Colorado. [Reuters]

Companies say they are more worried about the uncertainty surrounding tariff policy than about the tariffs themselves.

Katie Farmer, CEO of US railroad company BNSF, said some sectors — steel among them — are showing signs of recovery, but others remain stagnant. "A significant amount of capital is still sitting on the sidelines because of the uncertainty around tariffs," she said.

In practice, many companies that have announced investment plans are delaying ground-breaking or waiting to see how market conditions develop, according to people familiar with the matter.

Chris Williamson, chief economist at S&P Global, said the recent uptick in manufacturing output largely reflects stockpiling rather than a structural recovery.

"Companies are building up inventories in anticipation of the Iran situation, supply chain disruptions and potential price increases," he said. "That looks more like a response to uncertainty than a signal of fundamental health in the manufacturing economy."

Tariff policy has delivered some benefits to certain industries.

President Donald Trump visits a US Steel work site in West Mifflin, Pennsylvania, in May. [Reuters]

Steel is the clearest example. US Steel in Gary, Indiana, recently announced it would invest up to $20 million to restart a tin production facility and create 225 jobs.

"Without Trump's steel tariffs, the US steel industry would be in a much more difficult position," said Timna Tanners, metals and mining analyst at Wells Fargo. "It would have faced significant pressure competing against cheap imported steel."

Analysts caution, however, that such cases do not amount to a broad manufacturing revival.

"The industrial base is improving, but it's not an explosive transformation," said John Urbahns, CEO of Greater Fort Wayne, an economic development organization in Fort Wayne, Indiana. "It's a gradual process that will play out over many years."

The deeper problem is that a manufacturing comeback does not automatically translate into job growth. Unlike in the past, modern factories rely heavily on automated equipment and AI-driven production systems.

"Today's manufacturing plants operate with far fewer workers than they used to," said Diane Swonk, chief economist at KPMG. "Even if more factories are built, the job-creation effect will inevitably be limited."

US manufacturing output has recovered somewhat, but manufacturing employment has continued its long-term decline.

Experts broadly agree that Trump's policies may succeed in expanding production capacity to some degree, but a large-scale recovery of manufacturing jobs on the scale of the Rust Belt's heyday is unlikely. "There is no going back to the 1950s or the 1970s," Swonk said.

sjy@heraldcorp.com