Why American manufacturing is losing jobs despite policies designed to bring them back. By Vernon O’Donnell
The math isn’t adding up. The current administration’s tariff policies designed to encourage domestic manufacturing should be creating American jobs. Instead, US factories shed 78,000 jobs in the year leading to August 2025 according to the U.S. Bureau of Labor Statistics, with durable goods manufacturing taking the hardest hit.
This isn’t the reshoring story Americans expected to hear by this point of the year. And it reveals something more important than simple job creation numbers: we’re trying to rebuild American manufacturing (largely via tariffs) without addressing the fundamental workforce crisis that’s preventing it from succeeding.
The facilities exist (though many need to be retrofitted to support modern tech). The investment capital is available. The policy incentives are in place. What’s missing is the skilled workforce capable of making reshoring economically viable for all parties – and that gap is stalling the manufacturing renaissance necessary for the resilience and sustainment of the American economy.
The skills gap nobody wants to talk about
Walk into any manufacturing facility today and you’ll observe what I call the ‘barbell effect’ – a workforce heavily weighted at both ends of the experience spectrum, with a troubling void in the middle.
On one end, you have skilled veterans with decades of institutional knowledge. These workers understand not just how to operate machinery, but why certain processes matter and how to troubleshoot when things go wrong. They possess the kind of expertise that can’t be downloaded or learned from a manual.
On the other end are younger workers entering an industry that looks dramatically different from the one their predecessors joined. They’re often underskilled for the technical demands of modern manufacturing, while lacking access to mentorship and education to close those skills gaps.
The problem isn’t simply that experienced workers are retiring (though they are, and at an accelerating rate). The deeper issue is that the middle generation simply doesn’t exist with the number of workers necessary to bridge the gap between an aging workforce and an under-equipped younger generation. For the last few decades, manufacturing wasn’t seen as a viable career path for young Americans. We told an entire generation to pursue college degrees (with the promise of white-collar jobs that delivered, at best, questionable outcomes) while the skilled trades went severely understaffed.
Now, as we attempt to reshore production, it should have been obvious we can’t simply rebuild manufacturing capacity through policy and capital investment alone. Without workers who can actually run these operations efficiently, the economic case for domestic production falls apart. Companies can build the facilities, but if labor costs are prohibitive due to productivity gaps and training overhead, or capable workers simply not existing, the math clearly favors offshore production even with increasingly severe tariffs.
Why reshoring is stalling
The recent job losses tell a story that tariff advocates didn’t want to acknowledge though it was readily obvious to anyone with boots on the ground in heavy industry verticals: bringing manufacturing back to American soil requires more than making offshore production more expensive. It requires making domestic production truly competitive. We must invest in building a sustainable workforce capable of operating efficiently at a significant scale.
Transportation equipment manufacturing, one of the sectors hit hardest by recent job losses, exemplifies the challenge. These are complex operations requiring sophisticated skills. You can’t simply hire workers straight from high school and expect them to maintain the quality standards and efficiency rates necessary to make domestic production economically viable. The facilities that are operating successfully in the US are often doing so at higher costs than their offshore counterparts, constrained by labor shortages and extended ramp-up periods as new workers gain the skills needed to reach full productivity.
Some states are bucking the trend. Connecticut, Alaska and Ohio added manufacturing workers during this period. Unfortunately, these represent isolated successes rather than a sustainable national pattern. The question is what these states are doing differently, and whether their approaches can scale. While the specifics vary, successful states typically share common traits: robust technical training programs, partnerships between manufacturers and community colleges, and early adoption of workforce augmentation technologies that help new workers become productive faster.
Beyond automation: augmentation as strategy
The conventional response to workforce challenges in manufacturing has been straightforward: automate everything possible. Replace human workers with robots, eliminate variability, reduce dependency on skilled labor. This approach has limitations that become apparent when you’re trying to reshore diverse, complex production. Complete automation requires massive capital investment, works best for high-volume standardized production and still requires skilled technicians for maintenance and troubleshooting. For many manufacturers considering reshoring, full automation isn’t economically feasible. And, even if feasible, the timelines required to make that level of investment relative to the desire to rapidly increase output doesn’t match – we simply cannot just bet on five years from now (or longer), but need to be taking significant action now.
The more practical, and immediate, opportunity lies in workforce augmentation – deploying technology that makes existing workers more capable and accelerates the upskilling of new workers.
This distinction matters. Instead of waiting five to ten years for workers to develop expertise through experience, manufacturers can use technology to compress that learning curve dramatically. Systems that provide real-time guidance, flag potential problems before they escalate and help less experienced workers make better decisions can bridge the gap between what novice workers know and what experienced workers understand instinctively.
Consider how this plays out on the factory floor. A veteran worker might instinctively recognize when a machine sounds wrong or when a process is drifting out of specification. A newer worker lacks this intuition. But technology can bridge that gap by monitoring conditions continuously, alerting supervisors to anomalies and providing context that helps workers understand not just what to do, but why it matters.
This approach doesn’t eliminate the need for skilled workers. It accelerates how quickly we can develop them, making reshored operations economically viable much faster.
The safety-productivity connection
Nowhere is the workforce skills gap more consequential than in workplace safety, and nowhere is the connection to productivity more direct.
Experienced workers have developed instincts about risk. They know which shortcuts are acceptable and which are dangerous, they recognize when fatigue is affecting judgment, and they understand how different operations interact to create hazards. This knowledge keeps them safe and keeps operations running smoothly. Younger, less experienced workers don’t have these instincts yet. They’re learning in environments where the pace is faster, the pressure is higher, and the margin for error is smaller than ever before.
The costs of this gap are measurable. Beyond the human toll, workplace incidents directly impact the productivity metrics that determine whether reshoring makes economic sense. For instance, the average cost of unplanned downtime in manufacturing is approximately $260,000 per hour, with some industries experiencing costs as high as $2.3 million per hour. Additionally, the total cost of work injuries in 2023 was $176.5 billion, encompassing wage and productivity losses, medical expenses, and administrative costs. These figures underscore the significant financial implications of workplace incidents.
In addition to this direct impact to productivity, keeping workers healthy is an essential aspect of keeping facilities productive. Losing a trained, skilled worker for any period of time to a workplace injury will diminish throughput and further strain the systems by removing key human ‘cogs’.
Forward-thinking manufacturers are addressing this by deploying technology that provides the kind of environmental awareness and risk detection that experienced workers possess naturally. These systems don’t replace human judgment; they supplement it, giving less experienced workers the information they need to work both safely and efficiently.
Making reshoring work
The current job losses in manufacturing don’t mean reshoring is impossible. They mean we’re approaching it with a narrow view of the challenge to be overcome. We can’t create simplistic policy incentives in the form of tariffs and expect manufacturing to return automatically. We also need to solve the workforce development challenge, alongside other key aspects: investment in infrastructure, adoption of bleeding edge technologies, and finding ways to offset hidden costs that make the economics more feasible for American manufacturers.
This requires a fundamental shift in how we think about manufacturing investment. Companies considering reshoring need to budget not just for facilities and equipment, but for workforce augmentation technology that makes domestic production economically competitive despite higher base labor costs.
And it requires moving beyond the false dichotomy between humans and automation. The manufacturers that will successfully reshore are those that see technology as a way to amplify human capabilities alongside further investment into automation. We must make inexperienced workers effective much faster while helping experienced labor optimize their skills and training.
Vernon O’Donnell
Vernon O’Donnell is CEO at Voxel. Voxel transforms existing security cameras into AI-powered safety systems that detect unsafe behaviors in real-time across industrial environments like warehouses and manufacturing facilities, enabling supervisors to prevent workplace injuries before they happen rather than responding after incidents occur.