1) The global supply chain has become increasingly deglobalized in recent years due to risks like trade conflicts, pandemics, and climate change. Many companies are reshoring production or establishing regional supply chains for stability and cost control.
2) Reshoring manufacturing to the US poses challenges like high wages and a shortage of skilled workers, but technological innovations can help address these issues. Technologies like automation, AI, additive manufacturing, and machine monitoring can enable more efficient domestic production.
3) If implemented successfully, these technologies have the potential to generate over $500 billion in additional economic output from reshoring lower-cost electronics and other goods currently imported from China and elsewhere to North America. However, workforce development
2. DEFENSE
Eclipse Ventures
The last 50 years have demonstrated unprecedented globalization of supply chains
The world globalized significantly from 1970-2021
MANUFACTURING
• $22.4T of goods & services are traded across
borders annually, roughly 28% of global GDP1
• Labor arbitrage and transportation productivity
initiated the shift, but regional advantages have
compounded
• The US has a growing trade deficit with China
currently roughly $300-400BN per year
• US and developed countries have seen
manufacturing as a % of GDP fall radically from
27 to 12%2
McKinsey Report: Globalization in transition: The future of trade and value chains
1 https://www.mckinsey.com/featured-insights/innovation-and-growth/globalization-in-transition-the-future-of-trade-and-value-chains
2 https://www.whitehouse.gov/wp-content/uploads/2021/06/100-day-supply-chain-review-report.pdf
3. DEFENSE
Eclipse Ventures
The world is shifting to an increasingly ‘deglobalized’ supply chain
MANUFACTURING
Increased global risks including geopolitical conflict, trade tariffs, pandemics and climate have prompted an end-to-end
review of most companies’ supply chains, and national investment in reshoring and regional trade / ‘friend-shoring’
Supply chain stability is critical for business
• Reshoring & supply chain resilience are critical to revenue
sustainability, cost stability and business operations
• 2/3 of executives surveyed in an economist special research paper
reported a revenue hits of between 6% and 20% in 2020-20213
• This report pre-dates geopolitical issues in Europe in 2022
Domestic & friend-shored supply chains are a national priority
• Supply chain disruptions are inflationary, which is a risk to
domestic GDP growth and citizen wellbeing.
• NDAA & other bills are blocking foreign production & investments
• The CHIPS & Inflation Reduction Act, other government actions
are attempting to incentivize domestic and nearshore production
3 The Economist: https://impact.economist.com/perspectives/sites/default/files/the_business_costs_of_supply_chain_disruption_gep_1.pdf
Revenue impact (Y Axis) across businesses who responded to The Economist 3
5. DEFENSE
Eclipse Ventures
It’s never been a better time to manufacture in the US
The next decade in US Manufacturing poses a half-trillion of additional economic opportunity
MANUFACTURING
While US manufacturers face non-trivial
economic headwinds, including:
• a rising US dollar making exports less
attractive,
• a looming global recession,
• energy and wage cost inflation, and
• ongoing supply chain disruptions,
manufacturing in the US is nonetheless
poised for some of its strongest growth in
the last half-century.
According to a McKinsey study, these
opportunities cut across manufacturing
sectors and include lower and higher-end
manufacturing.
McKinsey Report: Delivering the US manufacturing renaissance
6. DEFENSE
Eclipse Ventures
Making the US manufacturing opportunity tangible
MANUFACTURING
The US imports almost half a trillion in goods annually from China. The majority of these goods are cellphones & wireless
devices, computers, routers and communications devices and other lower-value electronics like TVs, displays and games.
Source: https://www.visualcapitalist.com/visualized-ranking-the-goods-most-traded-between-the-us-and-china/
7. DEFENSE
Eclipse Ventures
Electronics global supply chain today
MANUFACTURING
End devices and ICs are designed at US & European
headquarters, raw materials are sourced in conflicted and far-
reaching countries, components are fabricated across hundreds
cities and dozens of countries, assembly occurs in labor-
competitive nations, US still 40% of Apple’s sales (for example).
https://www.businessinsider.com/where-iphone-parts-come-from-2016-4
8. DEFENSE
Eclipse Ventures
What systemic re-shoring challenges do US manufacturers face?
MANUFACTURING
We have the opportunity to manufacture hundreds of billions in parts and final assemblies. What could go wrong?
US manufacturers face several headwinds and disadvantages for re-shoring:
High wages Shrinking, unskilled workforce Supply chain ecosystem
• Even though wages in countries used
for supply chain labor arbitrage have
been rising, the comparative fully-
burdened cost of US labor is still very
high.
• In order to afford US labor and keep
prices cost-competitive, manufacturers
need workers who products more than
2-5x the output.
Average fully-burdened cost per hour of manufacturing labor 5
• Almost 2M unfulfilled
manufacturing roles in US today
• Retirements, low numbers of trade
school graduates & apprentices
• Asia has incredible regional economies
of scale for subcomponent and parts
suppliers.
• The intraregional share of global and
“regionalization” is most prevalent in
developing Europe & Asia for close
integration of many suppliers for just-
in-time sequencing.
5 https://www.statista.com/statistics/744071/manufacturing-labor-costs-per-
hour-china-vietnam-mexico/
Source McKinsey: Globalization in transition: The future of trade and value chains
9. DEFENSE
Eclipse Ventures
We can’t simply copy-paste these ecosystems. Technology is key.
MANUFACTURING
A simple copy-paste of systems developed in other areas won’t succeed. Comparative advantages the same across
countries. The US has always had a comparative advantage in innovation & technology. We need to leverage innovative
new tools and strategies to enable high-margin, efficient and effective supply chains to exist in North America.
Manufacturing
Automation
Artificial Intelligence
& Computer Vision
Low/No -Code
Modern MES
Additive
Manufacturing
Manufacturing
Upskilling
Machine Condition
Monitoring
6 Technologies manufacturers can leverage to transform their operations
10. DEFENSE
1) Microfactories & manufacturing automation
6 Technologies to transform US manufacturing
Microfactories are ideal for high-mix, low volume assemblies. Leveraging software and low-cost robotics, there are increasing numbers of
manufacturing automation players in the market automating full lines for end-device and goods assembly, not just parts or sub-
assemblies. Warehousing automation led the way for automation to be used in a broader variety of industrial environments.
Case Study: Bright Machines
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11. DEFENSE
2) Artificial intelligence & computer vision
6 Technologies to transform US manufacturing
There were more than 2.8M workplace injuries in 2019 (prior to the pandemic & not inclusive of COVID-related illness)6. Advances in AI &
computer vision mean existing camera infrastructure can play a major role in non-intrusive worker safety & operational productivity in
industrial environments. Machine vision for manual inspection and controls is also under development although in earlier days.
Case Studies: Voxel AI
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6 Bureau Labor Statistics: Employer-reported workplace injuries and illnesses – 2020
12. DEFENSE
3) Low-code / no-code manufacturing applications & modern MES
6 Technologies to transform US manufacturing
Traditional MES legacy systems were built for stability and meant to last but have struggled to keep up with the fast-paced, complex
market demands and disruptions of today. An increasing number of technologies have targeted MES integrations that enable technicians
to make modifications without complex programming or expensive change orders.
Case Study: Tulip
MANUFACTURING
13. DEFENSE
4) Additive manufacturing
6 Technologies to transform US manufacturing
Additive manufacturing is no longer just a novelty technology for prototyping and low-volume designs. The technology has evolved
significantly, and major brands are beginning to adopt leading-edge solutions.
GE 3-D prints fuel nozzles for jet engines, Stryker uses additive for spinal implants, and Adidas prints latticed soles for high-end running
shoes7. Leveraging advanced additive manufacturing for parts manufacturing is key to any near-shored supply chain strategy.
Case Study: Vulcan Forms
MANUFACTURING
• Vulcan Forms is the world's most powerful
laser powder bed fusion system. Each
printer deploys 150 laser beams projected
from a gantry. MIT patented technology.
• Each printer is 20 feet high & 60,000 lbs
• Currently customer industries include
aerospace, semiconductors, defense and
medical implants.
• Materials used: titanium and other metals.
• Process: Additive layer by layer, each as thin
a human hair, up to 20,000 layers,
depending on a part’s design. Internal
machine atmosphere is mainly argon.
7 https://www.nytimes.com/2022/07/03/business/3d-printing-vulcanforms.html
14. DEFENSE
5) Machine condition monitoring
6 Technologies to transform US manufacturing
10-15% of losses in manufacturing productivity are due to mechanical issues8. Unplanned downtime is the ultimate bad scenario in
manufacturing and scheduled maintenance has historically been an inefficient, necessary evil.
Today’s machine monitoring solutions offer not only constant monitoring & alerting across most equipment types, but also predictive
maintenance capabilities and machine learning based on large datasets across many customers and machine types.
Case Study: Augury
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8 https://www.augury.com/
15. DEFENSE
6) Manufacturing Upskilling
6 Technologies to transform US manufacturing
The US is projected to have 2.1M unfulfilled manufacturing jobs by 20309. Manufacturing has a problem attracting new, young and
diverse talent pools despite tremendous demand. While great upskilling programs like GUILD exist in other sectors, industrials have
structural challenges that prevent these solutions from having their full impact.
Workforce churn is incredibly costly. Upskilling may be a solution
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GUILD Education Case Study Challenges with industrial
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9 https://www2.deloitte.com/us/en/insights/industry/manufacturing/manufacturing-industry-diversity.html
Source: https://www.guildeducation.com/
