The Reindustrialization of America Is Underway

The US is entering a long industrial rebuilding cycle focused on strategic self-sufficiency rather than complete economic independence.

• US manufacturing’s share of GDP has declined from approximately 28% in the 1950s to roughly 9% today, while dependence on foreign suppliers has increased for pharmaceuticals, semiconductors, and defense components.
• Since the 1980s and 1990s, the number of major US defense contractors has fallen from 51 to five, large shipyards from 19 to eight, and the US share of global semiconductor manufacturing from 37% to approximately 10%.
• Policy support includes $1.2 trillion authorized by the Bipartisan Infrastructure Law, hundreds of billions of dollars under the Inflation Reduction Act, and $52 billion from the CHIPS and Science Act for domestic semiconductor production.
• US construction spending on manufacturing and oil and gas projects tripled in the three years after the pandemic to approximately $250 billion, although the increase has been concentrated mainly in computer and electronics manufacturing.
• Apollo estimates that restoring manufacturing and defense capital stock to its 2000s share of GDP would require approximately $2 trillion of incremental investment, rising to roughly $6.5 trillion to return to 1980s levels.

Takeaway: Investors should focus on the multi-year capital requirements around energy, semiconductors, aerospace and defense, rare earths, pharmaceuticals, and automation, while allowing for labor shortages, power constraints, cost overruns, policy changes, and uneven demand.