TLDR;
This video explores the challenges and possibilities of bringing manufacturing back to the U.S., using Guardian Bikes as a case study. It examines the historical decline of U.S. manufacturing due to globalization and lower labor costs overseas, particularly in China. The video also discusses the role of automation, tariffs, and government policies in revitalizing domestic manufacturing, as well as the difficulties in finding skilled workers and establishing local supply chains.
- Guardian Bikes is reshoring manufacturing to the US.
- US manufacturing declined due to globalization and lower costs overseas.
- Tariffs and automation are key factors in revitalizing US manufacturing.
Introduction [0:00]
Guardian Bikes is manufacturing high-end bicycles for kids in Seymour, Indiana, producing about a thousand bikes a day, which translates to one bike every 30 seconds. Starting in 2022, the company began shifting its manufacturing out of China, a challenging endeavor that involved risk-taking and initial financial losses. Guardian's story reflects the broader difficulties companies face in moving manufacturing back to the U.S. Between 1997 and 2023, the number of U.S. manufacturing firms and plants dropped by 25% due to decreased global trade barriers. While nearly 20 million Americans were employed in manufacturing in the late 1970s, today that number is just 12.7 million. Despite efforts to revitalize manufacturing, economists and trade experts are divided on whether a manufacturing renaissance is possible or even sensible.
Guardian Bikes [1:53]
Guardian Bikes started in 2013, initially making safety brakes before pivoting to manufacturing entire bikes. At that time, bicycle production had largely shifted outside the U.S. The company initially imported its bikes from a Chinese Original Equipment Manufacturer (OEM), which produces products based on provided specifications. As the brand grew, the company wanted greater control over quality, and manufacturing onshore would provide better visibility over the final product, as well as lower shipping and inventory costs. The lead time to get bikes from China was six to eight months, making it difficult to maintain stock of the right colors, sizes, and styles. By sourcing materials domestically, Guardian Bikes can build bikes just in time. In 2022, the company opened its Midwest facility, and today, its annual revenue is over $100 million, producing about 12,000 bikes per week. The company welds a bike in about three minutes, and most component parts are cut in five to nine seconds. The biggest challenge is finding parts outside of China, as the supply chain for many parts no longer exists in the United States. New tariffs are starting to change this dynamic, with domestic parts sometimes becoming cheaper than those from China. Guardian Bikes has also combatted the advantages of offshoring, like labor costs, by creating a highly automated production process. The company found workers laid off from nearby auto plants, and proximity to other manufacturers helped them source parts locally. By the end of 2025, the company expects that 70% of the bike's components will be made in the U.S., and by 2026, that number could reach 100%.
U.S. manufacturing decline [5:20]
Manufacturing a bike involves various components like chains, handlebars, tires, and a steel frame, all requiring specialized machinery and a network of industries. Input suppliers tend to open near factories, creating a local supply chain. It's not always easy to move every component to the U.S. because the necessary inputs may only be available overseas. As trade barriers lowered in the late 20th century, U.S. companies began moving manufacturing operations overseas or ordering components from OEMs in countries like China, Mexico, Vietnam, and Thailand. This shift was driven by globalization in the 1980s, the North American Free Trade Agreement in the 1990s, and China's entry into the World Trade Organization in 2001. Cheaper labor abroad led to lower prices and closed factories in the U.S. China has emerged as a dominant player in manufacturing due to the size of its manufacturing base. The average wage for a manufacturing worker in the U.S. is around $35 per hour, while in China, it's around $4 per hour, and in Vietnam, it's even lower at $1.30 per hour. China has also invested heavily in training its workers and building high-tech factories. In 2019, China spent around $248 billion on industrial policy, compared to $84 billion by the U.S. The U.S. provides some support for domestic production, such as the 2022 CHIPS Act, which allocated around $39 billion for semiconductor fabrication plants. In the U.S., manufacturers also face concerns around environmental impact, as environmental laws are in place to prevent pollution. Manufacturing hubs in China and Vietnam do not impose the same environmental standards as the U.S.
Finding workers [10:37]
The US has shifted from a goods economy to a services one, with service jobs accounting for over 80% of non-farm employment. Economists are divided over whether a manufacturing renaissance makes sense, with some arguing that most manufacturing job losses were due to automation, not trade. Many manufacturers face challenges finding workers, with over 400,000 open manufacturing positions in the U.S. Some argue that Americans are not clamoring for these jobs because the average manufacturing job doesn't pay as well as the average service sector job. While President Trump touted tariffs as a means to boost goods production, the debate continues on whether tariffs can turn back time. Some argue that tariffs can be a net negative for the broader U.S. economy, while others believe they could bring back American jobs in some industries and revitalize factories closed due to offshoring. A responsible and strategic use of tariffs is important for the success of manufacturing policy and bringing some jobs back to America. Guardian Bikes is continuing to bet that made in the U.S. is not only possible but advantageous. Today, its Seymour facility employs 250 workers, with plans to hire more as it scales up production.