Strategic levers to transform supplier capabilities
Turbocharging US
Automotive Manufacturing Competitiveness
In collaboration with MEMA Original Equipment Suppliers
Turbocharging US
Automotive Manufacturing Competitiveness
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A Segmented Strategy
A decades-long immense widening of the country’s trade deficit in auto parts has exposed domestic gaps. Imports were well over twice the value of exports in 2024. Efforts such as the US-Mexico-Canada Agreement (USMCA) and the CHIPS Act have aimed to reverse this imbalance, but high labor costs, underinvestment in automation, fragile skills pipelines, and deep import dependencies persist. These challenges cannot be solved by OEMs or suppliers acting alone.
Many of today’s issues trace back to past policy choices: NAFTA’s encouragement of relocations to Mexico as well as China’s 2001 World Trade Organization (WTO) accession, which contributed to a 33% decline in US manufacturing employment over the following decade. Restoring balance now requires coordinated action across suppliers, policymakers, and OEMs.
As reshoring and investment reshape the competitive landscape, our experts are ready to help you navigate what’s next. If you’d like to explore how these insights apply to your business, please get in touch.
A major gearshift is underway in the US automotive industry but whether it delivers the acceleration needed to keep pace with global rivals remains uncertain. Technology disruption, pandemic shocks, and geopolitical tensions are forcing a reset, while long-standing structural weaknesses have finally caught up. To remain competitive and secure access to system-critical technologies, the US must rethink its industrial foundation.
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Semiconductors or microelectronics
PCBs
Critical minerals
Specialized metals or alloys
Batteries or battery cells
Castings or forgings
Tooling or precision molds
43%
The US may have become the world’s largest importer of automotive content, but it retains global competitiveness in select, high-value segments. Targeting these for reshoring offers the most viable path forward (alongside system-critical components for on- and off-highway, industrial, and defense applications). Doing so requires coordinated and targeted interventions to clear roadblocks created by unfair trade policies, complex regulation, and high cost barriers.
Reshoring and foreign direct investment (FDI) job announcements surged from roughly 11,000 in 2010 to approximately 289,000 in 2023, supported by three consecutive administrations.
100
90
80
70
60
50
40
30
20
10
0
Yet the ultimate goal is not simply to become a net exporter but also to build a globally competitive and resilient supplier base in technologies that will define the next industrial era: batteries, autonomy systems, sensors, software, semiconductors, AI, quantum computing, and rare earth materials.
Every percentage point of foreign dependency increases exposure to geopolitical and industrial risk across not only automotive, but other industrial sectors as well.
Where Is Reshoring Most Viable?
Reshoring potential varies widely across subsystems, depending on input dependencies, capital needs, and supply chain maturity. The toughest bottlenecks remain in specialized metals, castings, forgings, and tooling, inputs that underpin nearly every major category.
Building a Competitive Future
Incremental change will not secure the future of US automotive competitiveness.
A new national industrial policy is needed, one that aligns OEMs and suppliers, builds resilience within the supplier ecosystem, and enables sustained investment.
Suppliers rank capital investment support as the most effective policy lever, followed by targeted rollback of tariffs and expanded workforce programs.
Strategic coordination across these areas can deliver the kind of long-term, win-win industrial policy already seen in leading competitor nations.
A Policy Pathway to Long-Term Competitiveness
About the Study
Strategic levers to transform supplier capabilities
Reshoring is least viable in labor-intensive and ecosystem-dependent products, such as electrical imports. However, it is strongest in heavy, freight-sensitive, capital-intensive components, such as premium and EV tires, EV battery pack assembly, and body and chassis elements.
Unlocking this potential requires local availability of advanced equipment, a robust industrial supplier base, and skilled labor to operate it.
1
2
3
4
5
6
Capital investment support
Targeted rollback of tariffs
Expanded technical workforce programs
Stronger “buy American” requirements
Direct support for critical materials
Increased tariffs on foreign goods
Lowest impact
Highest impact
“Turbocharging US Automotive Manufacturing Competitiveness,” a landmark study by Arthur D. Little and MEMA Original Equipment Suppliers, draws on a survey of 109 global automotive suppliers with major presence in the US and more than 30 interviews with C-suite executives of leading global automotive suppliers across 13 commodity groups, plus OEM experts. Interviewees were based in North America, Europe, and Asia.
Policymakers
OEMs
Suppliers
Establish predictable, holistic industrial frameworks; expand incentives for SMEs; and ensure regulatory stability
Anchor advanced manufacturing, such as gigacasting, e-axles, and semiconductor integration domestically, and align supplier qualification standards
Invest in automation, certification, and collaborative workforce programs while institutionalizing supply chain resilience
Without alignment across these levels, the US supply base will remain vulnerable to offshore competition and may struggle to scale resilient operations, risking further decline.
The study recommends a three-tiered strategy to build a resilient, competitive manufacturing base:
0
50,0000
100,000
150,000
200,000
250,000
300,000
350,000
2023
2022
2021
2020
2019
2018
2017
2016
2015
2014
2013
2012
2011
2010
Jobs announced
10,868
23,355
52,285
64,283
98,758
74,020
114,217
179,693
150,205
98,724
156,256
245,137
343,304
289,299
Source: Arthur D. Little, Reshoring initiative
Reshoring and FDI job announcements by year, 2010-2030
Key constraints to onshoring, US-based Tier 1-3 suppliers
17%
22%
17%
38%
19%
19%
24%
36%
28%
12%
24%
19%
26%
19%
35%
88%
7%
7%
42%
6%
19%
32%
37%
12%
19%
32%
Policies that may improve US manufacturing competitiveness
Not a constraint
Slight constraint
Moderate constraint
Significant constraint
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