Is $20 Trillion Enough to Rebuild U.S. Manufacturing? | Alex Krutz

Added: 2026-05-13

[00:00:00]Is manufacturing really coming [music] back to the US and is there significant investment coming into the country?

[00:00:07]Today we sit down with Alex Kroos who has been involved [music] in the trade policy of the federal government. He's here to tell us [music] what's happening right now with manufacturing and investments into the country. Right now, America only builds less than half a percent of the world's ships. [music] 50% of it China. Another 40% is Korea and Japan. We [music] don't make those here and we haven't made them here for 40 years. I'm Siam. Welcome to Market [music] Insider.

[00:00:38]>> Alex, it's great to have you on.

[00:00:39]Welcome.

[00:00:40]>> Thank you, Seat. I appreciate you having me on.

[00:00:42]>> There's a lot of talk about manufacturing coming back. There's some activity, but a lot of people don't really believe that things are coming.

[00:00:50]>> So, I think it's a combination. So, I think there are several scenarios. You have your existing companies that are American companies here that need to expand capacity, invest in new machines, invest in new employees. They're get their order books. They're getting more orders. And so you have that organic expansion of American companies. Then you have companies that are for foreign direct investment that uh have already been here but are foreignowned. You know, the Hondas, Hyundai's, Saffrons, Airbus, etc. So they are foreign companies that have American presence that will continue to expand more uh TSMC from uh Taiwan for semiconductors etc. So all these different companies that are foreign are coming in because of the foreign direct investment push from last year almost $20 trillion uh that the administration sought after from foreign countries and companies.

[00:01:39]And then you have a new segment of new companies from countries under these bilateral trade agreements that are making commitments to invest more here that maybe haven't done that in the past. So you have multiple different categories of companies that are going to be investing, growing uh their manufacturing footprint here.

[00:01:58]>> Alex, we talked about the $20 trillion number here on this show and some people didn't believe it. How real is it?

[00:02:05]>> It's very real. It's very real. I mean, you can go look at all the the news clippings and announcements that CEOs with administration would be up there making announcements about last year. So there is a real investment coming here and some of them come through bilateral trade agreements where there's a dollar commitment or some type of monetary commitment. Some of them are companies that are making commitments to come here. It might not be exactly 20 trillion. Maybe it's 19 or 18.5 but somewhere in that area versus 1 trillion the free four previous years.

[00:02:37]>> And is it going to come over a few years or is it going to come fast?

[00:02:41]>> I think it's going to be phased. Um there's initial uh amounts that have to because you have to break ground, you have to do site selection, you have to build the factories, start construction.

[00:02:51]So that's the first wave of investment that that comes. I think that we've seen that this year that construction's up by several hundred% than what it was in years previous. And so that's a big driving force of the investment initially to break ground. Then the next wave is machinery. uh in that investment to bring machinery here or buy machinery that's here in order to make the product and then the the last kind of wave is the hiring of employees and then uh buying raw materials and product and so it's probably going to be over a couple year period right you know I don't think people are going to see all of a sudden a factory just pop up um but I think you have the commitments and I and and then companies start going why I think it's real is because once companies commit it they don't turn on a dime time. They don't turn very quickly. They have to make their plan and move forward on it.

[00:03:41]They're looking at what their order book is, what their sales are to their customers and clients, what they have to deliver, and then they make a a big financial commitment for what what we say in the industry, capital expenditures, right? The machinery, the construction costs, all that, hiring the labor, buying the raw materials, they are investing that over a couple year period. And so once it gets started, you continue on it. you don't just start it and then all of a sudden stop. They're signing leases and long-term contracts for uh this work to take place. So, a lot of that is already underway this year and we're seeing a lot of those benefits. So, over the next couple years, we will see uh more of that manufacturing productivity come back to America.

[00:04:23]>> Bringing this manufacturing back, how do you think it will impact the society here? A lot of people are confused about the trade deals and the tariffs and you've been part of this. The America first trade policy has a couple of tenants or anchors to it. Number one has been tariffs and I know that there's been an overturn with the use of tariffs uh with the IEPA uh the emergency act but now it's under uh what they call section 122 tariffs. Um those tariffs were implemented to balance out trade.

[00:04:53]Um because for many years, last 30, 40, 50 years, many other countries have had trade barriers that the that the American people just didn't realize happened where either countries wouldn't accept American exported products or they had a very high tariff rate on it because they didn't want our products uh to compete with theirs. And so that those tariffs as they were implemented uh were to balance out the trade dynamics that have been developed over the last you know 30 or 40 years and I think that people are going to see more of that uh from those deals which are now more bilateral in nature or one-on-one from country to country. uh they're going to see those benefits versus very large complex uh multinational agreements that uh sometimes can get lost in details. But to answer your question, the benefits the American people are going to see is good paying middle class manufacturing jobs.

[00:05:52]>> What kind of manufacturing?

[00:05:54]>> Definitely heavy industry. So I think that when you think about more aerospace, defense, automotive, uh the president and the administration is driving hard on uh ship building uh both commercial and more military ships. You see that with the defense budget of $ 1.5 trillion that was announced just very recently. Uh in other industries uh semiconductor, high-tech uh these are all uh industries that will continue to grow. I think that industries that probably won't uh will be like textiles, clothing, shoes, maybe some more simple pots, pans, or other types of uh you know, maybe basic appliances, those type of things maybe aren't on the high-tech or from a uh perspective that we would want to bring back. But I think those high-tech, high content industrial uh applications and especially areas that require semiconductors, electronics and technology as well as heavy industry that requires steel, aluminum because once you drive those industries, for example, ship building or building drones, uh some high volume, high industrial application industries, that that drives a lot of raw materials, steel mills, aluminum mills and other processing in the mid tiers, right, of of manufacturers. It's like a whole stream of manufacturing uh that comes with those high-tech and high content uh complex.

[00:07:18]>> So, what about TVs and things like that?

[00:07:20]At some point, I heard from someone that we don't have the technology to build TVs in America and I was like shocked.

[00:07:27]>> We absolutely can build the TVs here, but do we want to? Does it make sense?

[00:07:31]Right. There are some places that uh do compete with us at the right cost. Uh that are lower cost but not uh uh I'll call it uh subfloor wages, right? That um are normal cost but are still lower cost environments to do those type of assemblies. But I think that the administration looks at what is important and for example iPhones, right? There was a lot of lot of discussion about iPhones and should we produce those and arguably that's a high-tech thing that we should produce uh those um but we have to think about our technology and advanced manufacturing in order to be able to produce iPhones at scale at a good cost.

[00:08:09]>> Do you think those things will come back iPhones and and computers and these type of things or do you think they will stay across?

[00:08:16]>> Well, let's look at Dell for example in Texas. Dell pushes out thousands of computers a day and they have a whole ecosystem of supply chain. So we have companies here that already do that and so there is a commitment from companies and there's companies that know how to do that. So I take for a grain of salt when people say we can't do something in America when in fact all of those products that are made uh everywhere else in the world Americans most likely invented it. Do you think we got this wrong because we outsource everything and now we're bringing things back, bringing some of it back. Do you think we were wrong in the process of outsourcing globally?

[00:08:55]>> I don't say it's wrong and I we could talk about it. I've been a part of that right throughout my career and um I think though the pendulum swung too far.

[00:09:04]there's a good balance to uh figure out what uh America and companies in America should produce and where we should have good partners uh that produce uh complimentary manufactured products along with that. A lot of companies took profits and uh really took the outsourcing model uh to an extreme and that hurt a lot of uh a lot of jobs a lot of factories within America. you know, in San Diego, I was a program manager at an engine company and we uh set up a factory in Poland and I was a part of helping get customer approvals and helping move production there. It was a fantastic factory in Poland, don't get me wrong. Great labor, great factory, brand new. And a couple years later, the factory I worked at in San Diego shut down and I had to move somewhere to get another job uh because of that. And so when you're in the moment, sometimes it doesn't make a lot of sense and it or it makes sense that why that happened. Um but over time I started looking at this and then as I started consulting and started my firm Patriot Industrial Partners in 2020 um I've been I've helped and been a part of that and so over these years I've seen where there's degradation to our America's broader industrial base and where I've started to promote uh American manufacturing where possible and I got that opportunity to really drive that hard uh uh in support of the administration's America first trade policies last year uh when I served in my uh uh role for the administration.

[00:10:40]>> Do you see a lot of jobs being created?

[00:10:42]>> When people look at the jobs reports, I think it's mixed because you have government jobs in there that are being reduced. You have manufacturing jobs that are being increased and you have some other jobs that had already been planned. Remember we talked about earlier when you set up a factory or you close a factory that happens sometimes and takes several years to do. So there are aspects of the jobs creation or jobs losses reports that also have effects from years previous. So I think that over the next you know couple years you're going to see it settle out where the government's at probably the level that it should be. uh the impacts of of previous made decisions are going to be completed and you're going to see the the uh the step up of uh manufacturing jobs uh slowly but surely increase uh over a period of time here.

[00:11:32]>> When you're saying manufacturing jobs, what do they look like?

[00:11:35]>> Yeah. So there's probably a lot of people that watch this where their father, their uncle, their brother, you know, somebody they knew worked in a machine shop or some type of foundry and it was very dirty and hard work and and uh old what we call manual machines, right? Those type of jobs are still there and we need those. But there's also going to be uh advanced manufacturing jobs that that run uh more advanced equipment, uh lights out machinery and automation. uh there'll also be some manufacturing jobs that are tied to AI and how those are done. So we are going to have a balance of those traditional hardwork factory jobs but then you have a a new wave of jobs that'll come through uh that's technology based uh that are uh going to be needed. When you look at this uh manufacturing activity that is coming here how much of it is from the investments foreign investments and how much of it is from our companies here our own innovation is there any any numbers or data any >> I don't I don't know the exact numbers and data but just ba based upon the previous four years the foreign direct investment was very minimal at one trillion and like we said anywhere from 18 to 20 trillion was the the number as it's finalizing out from last year. So over the last couple years, any investment that has been done has been more organic with American companies.

[00:12:58]But I think we're going to see that shift with uh international companies uh coming in investing more uh Korean Japanese uh just to name a few. Uh then out of the UAE uh there are a variety of different countries that are going to be investing here. Even with India trade deal, uh there will be some investments here from India uh as well. So, we're going to start to see more investments uh foreign direct investments from international companies.

[00:13:24]>> So, are they investing here because of the tariffs and they want to bypass the tariffs or is there any other reasons they're bringing their >> I think that's a big that that was a big issue, right? And still will be um because the tariffs went from the AIPA tariffs that the uh Supreme Court did uh rule was uh not the right method to uh uh apply tariffs. And so the president put out uh section 122 tariffs that have a six-month time frame uh up to 15%. And so that's what the tool of tariffs that's being utilized right now, but it'll graduate to what we call sectoral tariffs uh for the 232 uh which are done out of the commerce department uh that are industry to industry. Uh and then there's section 301 tariffs that uh can be done by countries that the USR uh United States trade representative does.

[00:14:12]So I think that uh there will be some level of tariffs for the years to come uh with these different tools and I think that is something that hasn't been there before under the free market that the US really drove. It will encourage companies to industrialize here because of that. But I think also we have to think about America is the number one customer in the world, right? And so we should take the opportunity to build here to satisfy our own demand. And I think that companies and countries internationally see that as an opportunity.

[00:14:48]>> You guys uh the administration took a lot of hit for the tariffs. A lot of people were complaining about them. Do you think they're working?

[00:14:55]>> Yes, because it's driving companies to manufacture here or source here. So companies that make here uh have over the years sourced internationally. And sometimes it hasn't been by choice because other countries uh market practices have either subsidized the cost lower have regulated their monetary policies and devalued their currency or drove capac over capacity in certain industries. So all these things would sometimes drive American companies or American supply chain out of business over the years. And so uh companies here that needed to buy those products from that supply chain sometimes didn't have that choice and so they'd have to go overseas.

[00:15:39]>> So do you see the country becoming more manufacturing oriented?

[00:15:44]>> So 20 years ago about 20% of our workforce was manufacturing. Now it's at about 9%. And so um are we going to have an extremely manufactured uh a heavy c country? I don't think so. Um but can we get back to 15 20 25% of our employment being manufacturing? I think we absolutely can and we should. Um when we think about national and economic security, we have to manufacture the products that that uh transport our goods that help our war fighter that help our supply chains both medically as well as uh logistically and our transportation methods. We need to manufacture the key parts, components, systems and end items that we need for our economic and national security.

[00:16:32]>> Now, Alex, this administration right now the the effort is to bring um manufacturing back and the trade policy is different than previous administrations. Is this going to last after the administration is gone or is there going to be challenges when the new government comes in?

[00:16:49]>> I think that's always a concern, right?

[00:16:52]when administrations change over, the Congress is going to need to codify some of these into law. Uh so, for example, I'll I'll I'll make a good example here.

[00:17:02]The president signed a an executive order uh called maritime dominance where he wants to build more ships. Right now, America only builds less than half a percent of the world's ships.

[00:17:13]>> Less than half a percent.

[00:17:14]>> Less than a half a percent. So, uh I think there's about 90% as between 50% of it's China. Another 40% 35 to 40% is Korea and Japan. And then there's a few other countries that that are about 5 to 10% of that. But America produces a half a percent. So all of those here in Long Beach, right, that people go down and when you see those large containers ships with all those, it says MK on the side or these large container ships that are thousand foot long, right? Um all of those are made in China and Korea and some in Japan. We don't make those here and we haven't made them here for 40 years, 30 years, something like that.

[00:17:54]And so the president signed uh an executive order uh for maritime dominance where we're going to make more commercial ships as well as ships that uh bring auto automobiles from Japan or Korea over to the US or take our automotive exports over to those countries. uh those automotive uh carriers aren't made here or LNG carriers or oil tankers all these that transport energy which is so important to us we don't make any of those ships and so that executive order is to drive policies for us to manufacture more more steel uh more of the holes more of the systems and more of those boats but we don't have a lot of those shipyards anymore because they've closed up because of uh that competition overseas so that executive orders trying to drive that. Now, back to your question, there's a legislative bill called the Ships Act uh that Congress should pass that will help fund uh some of the needed areas to help us build larger commercial ships and ultimately will help our naval uh ship building efforts as well, which we build great uh warships uh but we don't build a lot of commercial ships.

[00:19:04]>> Do we have to subsidize them or is it possible to build them at a cost-effective way? I look at it not from a subsidy perspective. It's all about demand. So if if there's international carriers that place orders to a US shipyard and they get volume because right now our ship builders build one or two or three ships of a kind at a time and that is not high enough volume. So you have higher cost of materials, your labor costs because you have to hire then fire and you have a lot of volatility when you only get orders of two or three ships at a time and you have very low volume. Where we produce out of some of our shipyards one or two ships out of that shipyard a year, large shipyards of China or Korea are doing one or two per day.

[00:19:48]>> So they're going to be a lot more cost effective.

[00:19:50]>> They're a lot more cost effective. So you have a lot more volume of so your steel prices are lower, your wages are lower because you are uh they're still competitive but they're able to be lower because you have a better trained workforce. They also have better technology.

[00:20:06]>> They also would get better if you build so many.

[00:20:09]>> Exactly. You get more efficient and so you uh you you leverage the volume. So when there's demand and so codifying uh for example a ships act would help drive demand uh to be placed at shipyards and that's where it ties back to the foreign direct investment. In my role last year we talked and they still are talking to for example Korean ship builders to come to America set up a shipyard or do partnerships with American ship builders expand our capacity in order to make more ships here so we can be more cost effective. they'll bring their technology but it'll be American workers and it'll be an American factory. So that's how uh when you tie tariffs uh encourage that production to come here you that foreign direct investment helps along with incentives for those companies to come here uh as well as congressional bills like a ships act as an example could then create incentives for American builders to do it. So I don't look at it and I know that the administration doesn't look at it in the way of subsidies but there are uh incentives right that can be codified legislatively.

[00:21:16]>> How much effort does it take to get this 20 trillion here? Do we as as a country are we going and talking to these companies one by one and trying to get them to come here and invest here and sell them the idea that they're going to have a better future coming here than producing in their country. So what's happened uh that I that I could tell you from last year is that Secretary Lutnik did a great job around creating investment uh scenarios and bilateral trade agreements that uh created free, fair and balanced uh trade arrangements and with those arrangements were bilateral trade agreements that also had foreign direct investment. when people would see on the news that the president or secretary Lutnik or others go to or even secretary Rubio, any of our administration officials go overseas and they're uh doing joint press conferences with those leaders. What they also do is they gather together companies there uh to meet with them and talk about investment and they work with those companies beforehand to make announcements. So that's how that 20 trillion over uh last year was calculated is every time the president or administration officials would go uh they were working with companies in that country to get commitments on how much uh money was could be invested in uh America's industrial base.

[00:22:38]>> Now Alex, was there a moment for you personally that you kind of thought the direction we were heading may not have been the right direction and you wanted to get involved? Yeah. So the probably the the biggest thing I could think and talk to people about is landed cost of items because companies over the years they would say look I put a purchase order to American company American supplier for $10 and I can go to I'm just making this up. Uh and I can go to this company in Asia for $6. So somebody says and they in the purchase order in hand $10 versus $6 and they look at that and say I'm making I'm saving $4, but what we've learned over these years is there that is the purchase order price. You have what's called a landed cost. And so what's not calculated in that $6 is the engineer or quality people you have to send over there when they make mistakes or it takes twice as long to transit over or gas and oil uh has spiked for whatever reason and so those costs are much much greater to do or the amount of design and development in that country. So all of a sudden that landed cost could be 7 8 9 $10. it could be sometimes near the same and and what I saw in some cases that it was actually more of a cost because they couldn't make it to the capability that we had and so they called in our industry scrapping out product and it would just be this vicious cycle where they couldn't make the product and it became so expensive to support it but everybody at the end of the day looked at I have a $10 and a $6, I'm saving money and in some cases they were but in other cases.

[00:24:26]That's where I scratched my head as a program manager many years ago and I said we're actually spending more money on this product from somewhere else in the world than if we just bought it here in America. It's not a perfect equation where it's exactly that like where it's always better. No, there's sometimes that it's better to do it somewhere else. But when you go through the massive pendulum swing we talked about, uh, we went too far and wherever there could be a dollar saved is where those things were outsourced and I think we just went too far in it and the landed cost is representative of that.

[00:25:02]>> Do you have any recommendations for CEOs? When we started outsourcing 20 years ago and 15 years ago, procurement departments where you had buyers and commodity managers and leaders and people that understood supply chain and sourcing and how to buy, those departments were significant in size and they had a lot of talent and so they could go to different parts of America and different parts of the industry and source products at good prices. When companies started to outsource to Asia or India or any of these other places, they started laying off and shrinking that capability within their teams because they saw it as a cost savings.

[00:25:44]It says, "Hey, I just need somebody to be able place an order with Asia. I don't need a somebody very technical and understand the process of commodity management. I just need somebody to tactically place an order." So teams went they shrank their overhead that managed supply chains and when you when you reduce that capability within your team then you become dependent on just placing purchase orders overseas. So I would say to to CEOs really look at your strategic sourcing capabilities within your company and improve that and grow that again and that will give you the opportunity to find good sources in America that can produce. In terms of the countries that we trade with, are there some winners and losers after these changes?

[00:26:28]>> We see some countries are not happy with the trading arrangement that's being created over the last year and a half um because they're very used to that outsourcing model. And I think that other countries understand the free, fair and balanced uh trade methodologies and uh that the administration wants to go to uh become favorable trading partners because they understand it and I think that many countries understand that over the years there's been an imbalance of uh more countries taking the work from America than us uh than than Americans and the US taking work from them. And so I see that those relationships are strong with those that see the fair uh free, fair, and balanced trade uh methodology.

[00:27:18]>> And it's pretty much every country has a tax on the American besides maybe Canada and and Mexico. A lot of the countries have a import tax on American goods, right?

[00:27:30]>> It varies from country to country. Um, and sometimes they, like I said earlier, they either have a tax or a tariff on certain products. And sometimes they have a trade barrier where they don't even allow that product in.

[00:27:41]>> So some products are banned.

[00:27:42]>> Some products are banned. As an example, in in Japan, 98% of the cars in Japan are Japanese-made and I think it's less than 2% that are Americanmade. And why is that? Because they want to protect their And now Japanese are a great ally of us of the US. But it's an example of protectionism that the US has had to deal with. And so American manufacturing automotive companies don't sell into Japan because of that trade barrier. And so part of the bilateral trade agreement was to open up uh automotive trade so American car companies could compete a little bit more in the Japanese market.

[00:28:22]So that's where you get to just not staying at fair at free but you get fair and balanced uh in those and again the Japanese are great allies and great partners. That's just an example of how that bilateral trade agreement is trying to change some of those behaviors of the past to make it a little bit more fair for American workers, American factories and companies.

[00:28:44]>> Now Alex, you served in the administration for a year and you're coming from a private background, right?

[00:28:50]You were working consulting. How was it to work in the government?

[00:28:54]>> I've never worked harder in my life. It was as a political appointee. You have 14 15hour days and it is it is crazy how uh much work there is to be done and uh there is a Trump factor on the amount of volume that the president puts out as far as uh executive orders and trade deals and also working for Secretary Lutnik. He was changing a very slow monolithic commerce department into a dealmaking machine. And so with all that energy around the government and the bilateral trade deals, the foreign direct investment, uh implementation of American first trade policy, all the executive orders, there was just so much to do. So it was it was a very very busy time, but it was very rewarding. I'd go back and do it all again even though I left my business for a period of time.

[00:29:44]People would say, "Oh, the the government's lazy and you know, and there's fraud, waste, and abuse, and sure, there is that, right?" But there's a lot of hardworking great Americans that are in the government uh both here domestically as well as around the world uh foreign commercial service officers uh commercial officers uh embassies uh but then here uh domestically there's a lot of great uh both political appointees and career employees that are moving the president's agenda forward as well as uh working for the American people. Um, so it is a I'll call it an underappreciated aspect of the majority of the government because I think the minority of the government that doesn't do the right thing gets the predominant amount of publicity, negative publicity, but there's a lot of good people doing a lot of hard work. Now in terms of your experience, you went from being in the supply chain manufacturing to kind of outsourcing yourself and your job and then doing consulting and then you did some government ex work to trying to bring some of these jobs back >> or different new jobs here. Are there any lessons that you've learned in this process that you want to share with us?

[00:31:01]>> Developing strategy in a company is very important. I think that over the years, companies that have um gotten weak on creating their strategy and really refreshing that and putting work behind it, it has hurt some companies. And so I would encourage companies to really understand their strategy, their market, where they buy, who they sell to, and what are the important factors for their business and not just to think about purchase order costs and where you can get the lowest uh you know the lowest uh dollar. We haven't even talked here about the risk associated with overseas logistics and all the different geopolitical issues and uh wars and conflicts uh that could arise and uh or government uh changes right that could affect different uh supply chains. So really thinking about your strategy where you buy where you produce who you sell to is so important.

[00:32:01]>> Alex Kutz it was great to have you on market insider.

[00:32:04]>> Thank you so much for having me. I really appreciate it. What do you think about the outsourcing and manufacturing?

[00:32:10]Do you think we have over outsourced as a country and we need to bring some of it back? [music] And do you think the effort of bringing manufacturing here in the US will be successful? [music] Make sure to comment. We read all of them. I'm Sam. This is Market Insider.

[00:32:24]We'll see you next time.