Should You Build a Manufacturing Plant in the U.S.? Reshoring, Supply Chain Risk, and 8 Hard Questions for 2026

Picture this: Your board is excited about reshoring. Your largest customer is pressuring you for local manufacturing. Your CFO has a spreadsheet showing lower logistical costs. And you’re three months from announcing a $40M facility investment.

Here’s what we’ve learned from evaluating 50+ reshoring decisions over the past decade: the companies that succeed don’t start with “should we build?” They start with “what problem are we actually solving?”

After the pandemic exposed supply chain fragility, trade policies under the Trump administration accelerated reshoring efforts across the manufacturing sector. We’ve seen this pattern repeat: leadership teams jump from frustration with offshore outsourcing straight to new facilities announcements, without stress-testing the fundamentals that determine whether bringing production back will strengthen or complicate their global footprint five years from now.

This article exists to slow that process down. Not because the process of returning manufacturing operations back to the home country is wrong, but because locking capital into the wrong structure is expensive, distracting, and often irreversible.

Why “Should We Build?” guarantees a biased answer

When leadership teams ask “should we build a U.S. plant?” they’ve already made a tactical decision masquerading as strategy.

Building a facility is one way to change your supply chain. It’s not a strategy in itself. What we see repeatedly: companies move from dissatisfaction with offshore manufacturing directly to domestic production plans, without defining what strategic problem they’re solving.

The right first question is strategic: What is broken, fragile, or limiting in our current setup? Is it risk exposure that’s keeping you up at night? Lead times that are losing customers? Margin erosion you can’t control? Access limitations with key accounts? Long-term positioning in a shifting market?

After analyzing dozens of these decisions, here’s the pattern: reshoring initiatives succeed when they respond to clear strategic needs. They fail when they’re reactions to headlines, political pressure, or the assumption that domestic presence automatically equals safety.

The eight questions below exist to separate strategy from momentum, and to help you make a decision that still makes sense five years from now.

1. What strategic problem is reshoring meant to solve in your supply chain?

Not all reshoring initiatives are strategic. Some are cosmetic responses to uncertainty.

Real strategic drivers we see:

• Reducing concentrated supply chain risk in volatile geographies
• Meeting customer requirements for local manufacturing (with contracted volume)
• Protecting high-value intellectual property in critical manufacturing processes
• Supporting long-term market positioning as U.S. demand fundamentally shifts

Non-strategic drivers that create expensive mistakes:

• Reacting to political pressure without demand validation
• Following competitors who may be making their own mistakes
• Believing domestic industrial presence automatically reduces risk

Here’s the discipline that separates the two: Ask your leadership team to describe what success looks like in 5-10 years. Be specific. Shorter lead times by how much? Lower volatility measured how? Stronger position with which customers? Better margins through what mechanism?

If you can’t articulate the future state clearly, with metrics, timelines, and dependencies, the process of returning production becomes a proxy for managing anxiety rather than solving a strategic problem.

From our experience: The most successful U.S. facility decisions we’ve supported started with leaders who could explain exactly what would improve, by how much, and why domestic production was the only path to get there. The projects that stalled or underperformed? They started with enthusiasm about “bringing manufacturing back” without defining what “back” actually delivered.

2. Is U.S. manufacturing demand real enough to carry fixed costs through cycles?

Fixed assets require fixed demand. This is where we see the most expensive miscalculations.

One large OEM making inquiries, one vocal customer, or one strong year does not underwrite a manufacturing facility. The question that matters: Is U.S. demand substantial enough, stable enough, and diversified enough to carry your fixed costs through inevitable cycles?

Here’s the pattern we’ve identified: Companies are increasingly overweighting signals (one anchor customer pushing hard, competitor announcements, state incentives) and underweighting fundamentals (multi-year demand visibility, customer concentration risk, cyclicality in target segments).

The stress test that matters:

• What percentage of projected capacity is backed by multi-year commitments vs. forecasts?
• If your anchor customer shifts sourcing priorities, does the business case survive?
• Can you articulate demand visibility beyond the next budget cycle?
• How diversified is your customer base across segments that don’t move in lockstep?

What we tell clients: Customer concentration is an operational time bomb. We’ve seen it detonate repeatedly. Before committing capital, pressure-test whether you’re responding to one prospect shouting loudest or building on a foundation solid enough to weather disruption.

3. Have you calculated the true total cost of ownership, without simplifying to fit the answer you want?

This is where reshoring business cases succeed or fail. And where we see the most creative accounting.

Labor costs are one component of total production costs. What gets missed: the hidden costs of offshore manufacturing (buffer inventory, expedited freight, disruption insurance, quality escapes, management bandwidth) and the realistic costs of domestic operations (not just wages, but retention, training, and productivity ramp).

Based on analyzing 200+ supply chain optimization decisions, here’s what actually matters in Total Cost of Ownership:

Offshore reality:

• Low-cost unit pricing that quietly generates 15-25% higher total costs through volatility
• Working capital trapped in safety stock you can’t reduce
• Logistical instability that forces expensive expediting and can disrupt operations
• Import dependencies (duties, tariffs, compliance complexity)
• Management attention consumed by firefighting

Domestic reality:

• Higher wages offset by reduced working capital and service level improvements
• Elimination of 8-12 week lead times that limit responsiveness
• Supply chain control that protects margin in volatile periods
• But only if critical components, materials, and tooling don’t remain offshore

The danger we see repeatedly: partial math designed to support a predetermined outcome. If you’re simplifying Total Cost of Ownership to make the numbers work, your decision is already compromised.

What surprises most finance teams: Offshore manufacturing often generates higher total costs while appearing cheaper on a unit basis. Domestic production can improve total economics while showing higher unit costs. The companies that get this right don’t optimize for the cheapest unit, they optimize for high-quality, resilient, profitable systems.

4. Does a U.S. plant strengthen your supply chain or just add another complex node?

More assets do not automatically mean more resilience. In fact, we’ve seen the opposite, particularly in sectors like semiconductor manufacturing where supply chain optimization is critical.

A U.S. facility can shorten delivery times and reduce risk. It can also add another node to an already complex global network, redistributing problems rather than solving them.

The question that separates real resilience from complexity theater: If critical components, materials, or tooling remain offshore, has risk actually moved? Or has it just changed shape?

After supporting 50+ manufacturing footprint decisions, here’s the pattern: resilient supply chains are designed as systems, not accumulated as assets. Companies bring production closer to home without rethinking their full global footprint, which typically creates more complexity, not less.

What we pressure-test with clients:

• Which dependencies move with domestic production, and which remain offshore?
• Does this facility simplify material flows or create new handoffs and coordination points?
• If a disruption hits your component suppliers, does domestic assembly actually reduce exposure?
• Are you solving lead time problems while creating inventory management problems?

From our experience: We’ve worked with clients who reshored operations only to discover they’d created a more complex, more fragile system because 60% of their critical inputs still came from the same offshore sources. The plant was local. The vulnerability wasn’t.

5. Can you actually attract and retain the skilled workforce your operations require?

Labor is not an abstract planning assumption. It’s a daily operational risk that can destroy your business case in the first 18 months.

U.S. manufacturing labor markets are tight, competitive, and mobile. Skilled workers have options. If your pay, safety standards, management quality, and culture are weak, people leave in months, not years.

What most leadership teams underestimate: This isn’t just a hiring problem. It’s a retention problem. And retention depends on factors that don’t appear in initial facility budgets.

Here’s what we’ve learned actually keeps skilled workers:

• Competitive wages (not “market rate”, actually competitive)
• Structured training programs with clear skill progression
• Safety culture that’s genuine, not compliance theater
• Management that treats workers as operational partners, not interchangeable units
• Career paths that make staying more attractive than leaving

What we tell clients: Budget 20-30% more for labor than your initial model suggests. Not because wages are higher than you think, but because retention, training, and productivity ramp take longer and cost more than optimistic spreadsheets assume. The companies that succeed front-load this investment. The ones that fail treat it as “HR stuff” they’ll figure out later.

6. Can your site actually deliver “speed to power”, or will infrastructure quietly destroy your timeline?

If site selection gets reduced to state incentives and tax breaks, then that’s a costly mistake.

What actually matters: How fast can you move from land acquisition to real industrial operations? That depends on energy availability, grid reliability, water access, transportation infrastructure (road, rail, port), and realistic permitting timelines.

Here’s what we’ve learned: Infrastructure constraints and local permitting can delay projects by 12-24 months. A site that looks attractive on a map can quietly destroy your business case through delays you didn’t model.

The “speed to power” stress test we run with every client:

• Is utility capacity available now, or does it require grid upgrades with 18-month lead times?
• Are water rights secured, or subject to allocation restrictions?
• Do transportation routes support your logistics model, or force workarounds?
• What’s the realistic permitting timeline, not the state’s promotional estimate, but actual experience?
• Does the surrounding industrial ecosystem support ramp-up (suppliers, service providers, skilled labor)?

The companies that succeed treat site selection as an ecosystem evaluation, not a real estate transaction. They validate infrastructure readiness before announcing anything publicly.

7. Is your headquarters actually ready to manage a U.S. manufacturing subsidiary?

Exporting to the U.S. is not the same as running a U.S. manufacturing operation. This gap destroys more facility investments than any other factor.

Operating a domestic manufacturing subsidiary brings procurement decisions, governance structures, financial reporting, tax compliance, HR management, legal obligations, and distribution network coordination that many headquarters fundamentally underestimate.

What we see repeatedly: European and Asian headquarters that excel at managing offshore contract manufacturers struggle when they own U.S. operations through onshoring or insourcing. The bandwidth, systems, and decision-making structures required are different, and often missing.

The readiness questions that matter:

• Does headquarters have capacity to provide real governance, or will the U.S. subsidiary operate with periodic oversight and chronic under-support?
• Are financial systems, reporting structures, and decision authorities clear before operations start?
• Who makes procurement decisions? Hiring decisions? Capital allocation decisions? (If the answer is “we’ll figure it out,” you’re not ready.)
• Does headquarters understand U.S. employment law, safety regulations, and compliance obligations, or assume they’re similar enough to home market rules?

From 15+ years supporting U.S. subsidiary operations, here’s the uncomfortable truth: Operational failure often starts far from the factory floor. It starts with headquarters that’s already stretched, adding a manufacturing subsidiary without the systems, bandwidth, or local decision-making authority to support it.

What we tell leadership teams: This isn’t a capability question. It’s a capacity question. You might know how to run operations, but do you have the bandwidth, systems, and sustained attention to run a U.S. subsidiary well? If not, acknowledge that limitation before committing capital.

8. Could you “rent” instead of “buy”, and outperform ownership on speed, flexibility, and cash?

Ownership is not the only credible option. And in many cases, it’s not the best option.

Contract manufacturing, shelter services, vendor-managed inventory, and light assembly near key customers can all deliver reshoring benefits, shorter lead times, improved service, domestic presence, with far less risk and far more flexibility.

What surprises most leadership teams: These models often outperform owned facilities on speed, capital efficiency, and adaptability. They’re not second-best compromises. They’re strategic choices that let you specialize in what you do best while ensuring domestic supply without locking capital into fixed assets too early.

Here’s when alternatives outperform ownership:

• When demand visibility is real but uncertain in scale
• When you need market presence before committing to fixed assets
• When speed to market matters more than long-term cost optimization
• When headquarters capacity to manage a subsidiary is limited
• When flexibility to scale up or down matters more than margin control

The patterns we’ve identified: Companies that “rent before buying” typically de-risk their U.S. entry, validate demand with real operations, and preserve optionality. Companies that jump straight to ownership often find themselves locked into structures that looked right on paper but prove suboptimal in reality.

From our experience: We’ve supported clients who used contract manufacturing for 3-5 years, validated their U.S. demand profile, understood their real operational requirements, and then made a much better ownership decision with actual data rather than projections. Others stayed with contract models indefinitely because they consistently outperformed owned facilities on total economics and flexibility.

The question isn’t “rent or buy?” It’s “what structure best supports our strategic objectives while managing risk appropriately?” Ownership is one answer. It’s not always the right answer.

The decision matrix: when reshoring and building a U.S. plant actually makes sense

A decision to build a manufacturing facility in the U.S. should survive a straightforward, non-negotiable test across six dimensions.

Your signals should be mostly green:

Strategic fit: Reshoring clearly supports long-term economic growth and market positioning, not just momentum or reaction to external pressure

Total Cost of Ownership: Domestic production is genuinely competitive over a 5-10 year horizon when you model realistic costs, not optimistic assumptions

Supply chain impact: Lead times and risk exposure are materially reduced, not just redistributed to different nodes

Labor feasibility: Hiring and retention are realistic given local market conditions, your compensation structure, and operational culture

Site readiness: Infrastructure and permitting actually support “speed to power,” not promotional timelines that ignore reality

Headquarters capacity: Governance, systems, and management bandwidth can genuinely absorb a U.S. subsidiary without weakening overall performance

If several areas are red, walk away. If signals are mixed, stage the move and test alternatives first. Only when fundamentals align across all six dimensions should you commit capital.

This isn’t about enthusiasm for reshoring or bringing manufacturing back to the U.S. It’s about discipline.

How ALTIOS de-risks your “build vs. buy” decision

ALTIOS supports small and medium-sized industrial companies by de-risking the decision before capital is locked in. Our role is not to promote facility investments. It’s to help leadership teams make a defensible “build vs. buy” decision based on operational reality, not momentum, incentives, or assumptions.

Proving or stopping the project before you pour concrete

Most reshoring failures begin with a decision that felt right but wasn’t rigorously tested.

We start by validating your business case from first principles. That means pressure-testing demand assumptions, Total Cost of Ownership models, supply chain resilience, and headquarters readiness as a single integrated system, not separate workstreams that get reconciled later.

If the case doesn’t hold under scrutiny, we say so early, before announcements, before land acquisition, before you’re committed to a path that looked good in PowerPoint but fails in reality.

Why this matters: Stopping a project at the feasibility stage preserves capital, management focus, and strategic optionality. When a project survives this phase, you move forward with confidence built on data, not hope built on enthusiasm.

Industrial site selection as ecosystem evaluation, not real estate transaction

When building is the right answer, site selection is not only about finding available land with attractive incentives. It’s about validating whether the industrial ecosystem can actually support your operations.

ALTIOS evaluates sites through the lens of long-term operability:

• Infrastructure readiness: utility capacity, grid reliability, water access, transportation routes
• Supplier ecosystem: access to service providers across Tier 1-3, local industrial clusters
• Regulatory reality: realistic permitting timelines based on actual experience, not promotional estimates
• Labor market depth: skilled workforce availability, competitive wage benchmarks, retention patterns
• Speed to power: how fast you can move from land to full operations, with dependencies mapped

What this prevents: Technically viable sites that fail operationally. We’ve helped clients avoid $5-8M in unexpected infrastructure costs and 12-18 month delays by identifying constraints during site evaluation, not after commitments were made.

From investment study through execution to ongoing operations, we stay with you

If “build” is the right answer, ALTIOS remains involved beyond the investment decision.

We support clients from industrial investment study through U.S. entity structuring, facility setup, and into ongoing corporate services, governance, compliance, coordination with local stakeholders, operational support once production is live.

Why continuity matters: Many reshoring efforts underperform not because the investment case was wrong, but because execution and governance were underestimated. The gap between “decision made” and “operations successful” is where most value gets destroyed.

What this looks like in practice:

• Phase 1: Investment study and business case validation (8-12 weeks)
• Phase 2: Entity structuring, site acquisition, permitting coordination (12-16 weeks)
• Phase 3: Facility setup, supplier onboarding, workforce development (20-24 weeks)
• Phase 4: Ongoing governance, financial reporting, compliance support, operational optimization

A neutral partner in complex “build vs. buy” decisions

ALTIOS is not a site developer, equipment supplier, or incentive broker. We don’t benefit from pushing you toward ownership over alternatives.

Our value lies in neutrality. We help leadership teams compare owned facilities, contract manufacturing, shelter services, and hybrid models with the same analytical rigor. The goal is not to build more factories. It’s to build the right global footprint for your strategic objectives.

What this means for you: We’re equally comfortable recommending contract manufacturing if the fundamentals don’t support ownership. We’ve helped clients structure partnerships that outperformed owned facilities on speed, flexibility, and total economics. And we’ve supported facility investments when ownership was clearly the right strategic choice.

Here’s the pattern we see: The companies that succeed don’t move fastest. They move most deliberately, with clear strategic rationale, validated fundamentals, and execution structures designed for long-term performance, not short-term momentum.

That’s the decision we help you make.

FAQ