The upcoming 2024 US election is poised to have significant implications for both Washington and the wider global landscape, particularly concerning manufacturing and trade policies. Former President Donald Trump has made it clear that he intends to revive American manufacturing, reminiscent of the largest trade conflicts of the 20th century. His administration’s focus on 'reshoring'—the process of bringing manufacturing jobs back to the US—has led major corporations to announce a staggering total of $1.9 trillion in investments. Companies like Apple, Diageo, and Johnson & Johnson are at the forefront of this movement, eager to bolster their manufacturing capabilities on American soil.

However, industry executives express caution as they navigate the complexities of this ambitious initiative. The time-consuming nature of establishing new factories means that, despite the announced investments, many plants may not be operational before the end of Trump's potential second term. Erin McLaughlin, an economist at the Conference Board, shares insights into the lengthy timelines involved in constructing manufacturing facilities, stating, “It will take between three and 10 years in most cases to build a new manufacturing facility in the US.” She elaborates that the entire process from site selection to construction completion demands careful planning and patience, with the image of a congressman ceremoniously turning a shovel of dirt only representing the beginning of a long journey.

Given the uncertainties surrounding trade policies, many companies may pivot towards acquiring existing businesses rather than embarking on the lengthy process of building new plants. McLaughlin notes, “It might be faster to buy a company than to build a new plant,” emphasizing the strategic shift that could occur as firms look to secure their supply chains amidst fluctuating trade conditions.

The apprehension among executives is palpable, particularly in light of the potential volatility of Trump's trade policies. AlixPartners’ global automotive market lead, Mark Wakefield, highlights the significance of a long-term strategy when making substantial investments in manufacturing: “The building of a plant will take years and then it’s going to be around for decades, so you have to have a very long-term view of where regimes will go.” The sentiment among leaders is clear; they prefer to wait and observe the evolving trade landscape before committing significant capital to new projects.

The recent chaos following Trump's tariff announcements has further aggravated the situation, drawing criticism from notable billionaires such as Stanley Druckenmiller and Ken Langone, co-founder of Home Depot and a long-time Republican donor. This criticism reflects a growing concern among business leaders about the potential economic ramifications of stringent trade measures, prompting calls for a re-evaluation of certain tariffs.

On Tuesday, US Treasury Secretary Scott Bessent shared insights on executive planning during a CNBC interview. He noted, “CEOs are not going to snap their fingers and find a greenfield site and build a factory, but I am sure that the planning has already started in boardrooms,” referring to the ongoing discussions among business leaders regarding future investments.

Building a new automotive plant typically requires a significant investment of time, estimated at a minimum of two to five years, varying based on the plant’s size and the inclusion of key components like powertrains and batteries. A case in point is South Korea’s Hyundai, which recently allocated $12.6 billion to establish an electric vehicle and battery cell plant in Georgia. The project illustrates the complexity and dedication required to launch new manufacturing operations; from land acquisition in 2021 to the expected production start in October 2024 involves a series of strategic milestones.

Even smaller manufacturing operations face similar hurdles. For instance, Volvo Cars invested approximately $1.35 billion in its South Carolina facility, which took three years to reach production capacity of 150,000 vehicles annually—deemed the minimum for economic viability in establishing new US plants.

As companies weigh their options amidst the uncertainty in the US market, many automakers possess sufficient capacity at existing facilities. Restarting previously closed plants could prove more cost-effective than constructing new ones. However, the ever-increasing labor costs in the US will necessitate a reliance on automation, a process that also requires time for equipment orders to be fulfilled. Furthermore, Trump's tariffs are expected to escalate the costs associated with overseas materials and technology, posing additional challenges for new construction.

General Motors has openly communicated the impact of policy uncertainty on its investment decisions, stating, “The market is pricing in a big impact of tariffs and lost profitability.” GM's finance chief, Paul Jacobson, emphasized the caution surrounding significant capital expenditures in a volatile environment.

Trade tensions also disrupt non-residential construction, with Morgan Stanley analysts predicting that this sector may suffer the most due to the uncertainties surrounding tariffs. The pharmaceutical industry, specifically, has been notably sheltered from some of the reciprocal tariffs announced by Trump last week. During a speech in the Rose Garden, he commended companies expanding operations within the US but warned that drug manufacturers could face significant financial repercussions if they did not comply.

Building pharmaceutical factories varies in complexity, with simpler facilities taking about three years to construct, while more intricate operations may require five years. As highlighted by Prashant Yadav, a supply chain expert at the Council on Foreign Relations, “Even adding a new production suite in an existing plant could take about 18 months.” The situation could be exacerbated by sweeping cuts to the US Food and Drug Administration, which risk prolonging the necessary inspections and approvals for new pharmaceutical facilities.

Despite these challenges, some major pharmaceutical players such as Johnson & Johnson and Eli Lilly have announced substantial plans for US manufacturing expansion. Industry insiders suggest that these announcements may represent previously established plans dressed up to align with the political narrative.

Trump’s ambitions also extend to revitalizing the American shipbuilding industry, once a leader in global maritime construction but now dwarfed by Asian counterparts. Experts assert that reviving this sector will demand years of investment in new shipyards. According to Antonella Teodoro, a senior consultant at shipping advisory MDS Transmodal, “On the optimistic side, it could take about five to 10 years to have a competitive facility up and running,” but cautions that achieving long-term success in global shipbuilding may take even longer.

In the realm of metals production, the US currently operates five active aluminium smelters as of 2023. To regain competitiveness in aluminium production, the country would need to construct smelters capable of producing around 1 million tonnes annually. Former Kaiser Aluminum executive David Krakoff estimates that this process could require as long as seven years to produce usable metal once the necessary permits and financing are secured.

In conclusion, the trajectory of American manufacturing and industry is intricately linked to the evolving political landscape, particularly as the 2024 US election approaches. The decisions made today will undoubtedly shape the future of manufacturing in the US and its position in the global market.