When you think of technology in the United States, you think of Silicon Valley, software, and social media. Very rarely do you think about machine shops, assembly lines, and physical goods. But that wasn’t always the case.
During World War II, the U.S. manufactured 300K planes in just a few years. To put that in perspective, there are ~40K planes in operation today, both passenger and cargo. Total. In 1945, at the end of World War II, the U.S. was manufacturing more than half of the produced goods in the world. So what happened?
By 2002, the U.S.’s share of global manufacturing had fallen to ~28%. By 2010, China surpassed the U.S. to become the predominant manufacturer in the world. By 2018, China represented ~35% of global manufacturing.
Source: Kapital Economics; World Bank
But as international relations deteriorate and globalization starts to slow, manufacturing capabilities in the U.S. are becoming an increased risk to national security. The startup world has started to tackle the problem head on, and VCs have taken notice.
As of May 2023, robotics companies alone had raised $4 billion in venture funding thus far this year. Over the last 6 months globally there are 1.6K+ manufacturing-focused startups have raised funding. These companies have cumulatively raised $500 billion in funding. The first 15 years of the twenty-first century represented a bias among investors to low-cost internet and software startups. But things are changing.
Increasingly, companies are more willing to take on physical infrastructure and capital expenditures. Companies like SpaceX, Anduril, Boom Supersonic, and Hadrian are leading the charge in rebuilding the American manufacturing base. Increasingly, both companies and governments will look to U.S. companies to build U.S. goods. The rebuilding of the American manufacturing ecosystem is just getting started.
