- Supply Chain Resilience Amid Global Disruptions. U.S. manufacturers are facing ongoing supply chain challenges due to global disruptions, including expanded tariffs and geopolitical tensions. While stockpiling is talked about in the news, it’s not a practice we’ve seen actually put into effect as of yet at scale. As uncertain tariffs loom, manufacturers are exploring diversification of their supply chains, sourcing from both domestic and alternative international markets. This approach aims to mitigate risks associated with over-reliance on specific regions, like China, which have previously disrupted supply chains during crises such as the COVID-19 pandemic.
- The Onshoring Movement and Domestic Production. There is a growing push towards onshoring, driven by both government policy and the desire for supply chain resilience. While U.S. manufacturing capacity remains a limitation, efforts are underway to enhance domestic production capabilities. This shift, while costly in the short term due to higher labor and production costs, is expected to strengthen the long-term stability and independence of the U.S. supply chain. As an underpinning of Trump’s trade policies, onshoring also hopes to spur economic growth and job creation within the country.
- Workforce Development and Technological Advancements. A critical challenge for the U.S. manufacturing industry is the need for a skilled workforce. To address this, there is a focus on workforce development through partnerships with educational institutions and trade schools. Training programs are evolving to meet the demands of advanced manufacturing sectors, such as automation, robotics, and renewable energy. Manufacturers need to remain agile, investing in technology and process improvements to enhance efficiency and reduce costs. While profit margins may be squeezed in the short term, the long-term benefits of a diversified and robust supply chain are likely to outweigh initial challenges.
- Infrastructure and Energy Efficiency. Infrastructure plays a pivotal role in the efficiency and competitiveness of U.S. manufacturing. Investments including transportation networks and energy resources are essential to supporting the industry’s growth. Smart logistics and energy availability help reduce operational costs and improve the overall efficiency of manufacturing operations. As manufacturers aim to optimize their supply chains, these infrastructural strengths will be increasingly important.
- Environmental, Social, and Governance (ESG) Evolution. Over the past few years, the legal landscape surrounding ESG regulations and legislation has been in flux, swinging between heightened ESG compliance obligations and, on the other hand, prohibitions when considering ESG factors in certain decision-making. Recently, the pendulum has been shifting back towards a focus on ESG issues, with anti-ESG laws slowing down and new disclosure obligations emerging. However, with potential changes in administration, this area remains one to watch closely. Regardless of these regulatory shifts, environmental compliance, workplace safety, and labor practices continue to be central to litigation and class action activity against U.S. manufacturers. Therefore, it is crucial for compliance programs to maintain a strong focus on these areas to mitigate legal risks and ensure adherence to evolving standards.
About the authors:
David R. Yates advises clients on international and domestic public and private mergers and acquisitions, investments, divestitures, joint ventures, and strategic transactions, including those involving cross-border complexities. He also counsels private equity funds and their portfolio companies on a wide range of middle-market complex business transactions. David’s clients include a broad range of publicly owned and privately held U.S. and foreign companies.
Laura Hammargren is the Administrative Shareholder of the Minneapolis office. She focuses her national litigation practice on the defense of complex product liability actions, toxic and other mass torts, and environmental litigation. Having served for several years as in-house counsel for a Fortune 500 multinational manufacturer, Laura has insight in creating business-focused litigation strategies that address the needs of corporate stakeholders and seek to mitigate against exposure in high stakes matters.