Podcast: How manufacturers manage risk in this era of instability

The Reshoring Institute’s Rosemary Coates returns to Great Question: A Manufacturing Podcast with Plant Services’ Thomas Wilk to catch up on how current events are impacting manufacturers who were already shifting their reshoring strategies.

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Despite geopolitical conflict and energy shortages, Coates identifies are few sectors that are thriving (semiconductors, pharmaceuticals, and plastics) and emphasizes the importance of community colleges in preparing workers for a new, more volatile manufacturing normal.

Below is a partial excerpt of the podcast:

Thomas Wilk: I don't know how we're going to cram it all into about 15, 20 minutes, but we're certainly going to hit the high points. If I could refer to our last conversation, which was in July 2025, maybe we can start with the topic of business uncertainty.

You said back last July that your institute had just finished interviewing 18 C-level executives, all of whom had said that due to business uncertainty, "they were doing nothing. They were making no investments, they were not opening new factories, they were not hiring—nothing until the economy stabilized a little bit."

So here we are, Rosemary, May 2026. Has anything changed in 10, 11, 12 months?

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Rosemary Coates: Yeah, everything changes every day just about these days. First of all, the IEEPA tariffs that Trump had placed on various countries and various levels were declared illegal on Feb. 20. And then on Feb. 21, he instituted the next set of tariffs, I think (Section) 201 tariffs, and they are now at 15% across the board on countries.

So, there's some stabilization in terms of the percentage but we know that those are only good for 180 days. They will also likely be declared illegal because that provision is related to the balance of payments, it really doesn't have anything to do with tariffs, so he's using it in a way that is probably illegal again.

However, in the background, he's put the Department of Commerce to work to develop again the (Section) 301 tariffs, which were the original in Trump 1.0 back in his first term, that were penalty tariffs against specific countries. And in order to put those in place, each country has to be evaluated to determine how they are mishandling, I guess, trade.

And then once they've declared those facts, then they can put tariffs back on those countries. So, there's kind of a stable period right now, but then I think we're going to see the same ups and downs that we saw in the past.

So, how are companies responding to that? That's the big thing is, you know, the cost of tariffs and I think there's in this period now, there's companies that are evaluating how to respond and what to do.

As I told you back a year ago, everything was on hold. Companies were waiting to do investments. But business moves forward. There's a lot of pent-up demand and they can't wait forever, so I think companies at this point are starting to reevaluate and move forward with investment.

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But we can see over the last year, the increase in manufacturing jobs in the U.S. has been completely flat for a year. So there was kind of nothing happening, there was no investment, no hiring, and it was very lackluster in terms of growth, but hopefully that we're going to see some growth this year.

TW: You mentioned that the executives were talking about making a lot of plans for the future, that the one thing they were doing was staying busy making Plan A, Plan B, and Plan C for what would happen once the time was right to act.

And I'm going to quote you directly again because I think your words were prophetic here. "Because of the instability of the world right now, you never know when a new war is going to break out or a new pandemic or something, so you need to have a lot of alternate plans."

Once again, here we are, right? There's a conflict between the U.S. and Iran, among other countries, and that's going to affect the access to petroleum, the price of petroleum, which, of course, impacts a whole lot of the plastic supply chain at the very least.

How, in your experience, are the companies you talked to responding to this specific event? Are they still putting things on hold, or are they just figuring they're going to do the best they can?

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RC: That's a good question, but it was kind of a surprise that we're now in another war, this time really major in terms of cost and effect overall on the economy.

So, how are companies dealing with it? It's yet another disruption, and I think at this point, companies are kind of settled into the thought that it's going to be constant disruptions. If it's not another war, a new set of tariffs, a new change in geopolitics, it's going to be a natural disaster or something. And so instead of saying, we're waiting around until things get normalized, it's how do we plan for all this disruption in our supply chains and our global manufacturing strategy?

What we're seeing now is that instead of companies simply reevaluating reshoring, they're thinking beyond reshoring. So it isn't just, you know, let's bring some stuff back to the U.S. to make it, but how do we move to the thought process for global manufacturing? How do we de-risk the supply chain by putting manufacturing in multiple areas?

We may have talked about a China +1 strategy or China +2 strategy where it may keep some manufacturing in China, bring some back to the U.S., put some in Mexico, maybe another Asian country, so that you even that risk across the world and are looking at alternative places to manufacture should one or another region be affected.

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Of course, as you know, the Strait of Hormuz being closed has pinched the global petroleum markets, and petroleum downstream is used for all kinds of things. It's the basis for asphalt, for plastics, for specialty chemicals that are used in all kinds of products, cosmetics, and all sorts of consumer products. Natural gas has been affected. And what's happened in the Middle East is it's not just a matter of we're waiting and all of a sudden the floodgates are going to open and it'll be okay. There's no oil production going on at the moment because there's no place to store the oil.

These refineries in the Middle East are shut down, and if and when the strait opens—and I would say it's probably later than sooner that that will happen—there is storage and some oil is going to move through the Strait, but because they haven't been producing oil, there's going to be shortages for a long time. So, I mean, it's this situation where there's so many unknowns, and businesses have to plan alternative strategies to address what might happen.