Restoring the U.S.’s eroded industrial base and securing critical supply chains will require up to $6.5T in new investment, according to a new report from Apollo Global Management.
Decades of globalization and shifting trade policies pushed manufacturing production offshore, driving U.S. manufacturing down to 9% now from nearly 28% of GDP in the 1950s, Rob Bittencourt, partner and head of Apollo Thematic Investing, wrote in a recent note. That historic decline has left the country heavily reliant on foreign suppliers for vital inputs, including semiconductors, pharmaceuticals, and defense hardware.
Recent supply chain shocks—from pandemic shortages to heightening geopolitical friction—have elevated reindustrialization into a rare bipartisan priority, Bittencourt said.
The erosion of America’s industrial base is visible in stark numbers. The number of major defense contractors has collapsed to just five from 51 since the 1980s and 1990s, while large shipyards shrank to eight from 19. The U.S. share of global semiconductor manufacturing plummeted from 37% to around 10% over the same period, and even many products assembled domestically still rely heavily on imported components and raw materials.
Early signs of rebuilding are emerging, as U.S. construction spending on manufacturing and oil and gas projects tripled in the three years following the pandemic to some $250B. However, the buildout remains narrow, concentrated largely in computer and electronics manufacturing tied to semiconductor facilities and compute infrastructure.
Apollo estimated that restoring the combined U.S. manufacturing and defense capital stock to its share of GDP in the 2000s would require ~$2T of incremental investment. Returning to 1980s levels would demand roughly $6.5T—capital that must come from companies, lenders and private investors beyond government incentives.
The goal, according to Bittencourt, is strategic self-sufficiency rather than complete economic isolation: increasing capacity where supply disruptions carry the greatest economic or national-security consequences. Priority sectors include energy, semiconductors, aerospace and defense, rare earth minerals, and pharmaceuticals, supported by advanced technologies like robotics, AI-enabled design, and additive manufacturing to offset labor costs and shortages.
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