Reshoring Yet Lack of Investment

Key Takeaways

• Manufacturing applications fell 39% YoY in May 2025.
• Forecasted 2026 index growth drops to 76.0 from 105.9.
• New factory construction value remains 10‑19% below 2023 peak.
• Capacity utilization steadied near 75% despite fewer new plants.
• Expansions, like John Deere’s $70M site, drive reshoring without greenfield builds.

Pulse Analysis

The United States has spent the past five years championing reshoring, with successive administrations deploying tariffs, incentives, and high‑profile campaigns to lure production back from China. That effort sparked a surge of announced projects between 2020 and 2024, pushing the inflation‑adjusted factory‑construction index to a record 12,070 in December 2023. However, Interact Analysis’ latest data shows a sharp reversal: applications for new manufacturing facilities dropped 39.1% year‑on‑year in May 2025, and the outlook for 2026 has been cut to an indexed growth of 76.0, well below the prior 105.9 forecast.

The slowdown is not limited to greenfield sites. Construction‑value metrics reveal a 10‑19% year‑on‑year decline throughout 2025, indicating that even large‑scale projects are being postponed or scaled back. Meanwhile, capacity utilization has rebounded to the mid‑70s percent range, suggesting that existing plants are absorbing demand through higher throughput and brownfield expansions. John Deere’s $70 million expansion in North Carolina exemplifies this trend: the company relocated Japanese production to an existing campus, adding jobs without increasing the national factory count.

For investors and policymakers, the signal is clear: reshoring success will be measured more by upgrades to existing footprints than by a wave of new builds. Capital allocation strategies should therefore prioritize automation, modular extensions, and supply‑chain resilience at current sites. At the same time, the muted pipeline raises questions about long‑term job creation and regional economic development tied to greenfield construction. Monitoring application indices and utilization trends will be essential to gauge whether the current pause is a temporary correction or a structural shift in U.S. manufacturing strategy.