You've been hearing about "reshoring" for years now. Mostly abstract policy talk. Press releases about semiconductor plants in Arizona. Maybe some vague references to supply chain resilience that sound good in speeches but don't connect to your actual business.
Then you try to figure out what it means for federal contractors, and the picture gets murkier. Is this just political messaging? Or is something actually changing in how DoD buys things?
Here's what we've learned from helping over 300,000 businesses position for federal contracting success: Something real shifted in 2025. And it creates openings for contractors who understand what's actually happening beneath the headlines.
What's Actually Changing
The defense industrial base has a problem that's been building for decades. Critical components for weapons systems, from rare earth magnets to precision machined parts, often flow through supply chains that run through countries we'd rather not depend on during a crisis.
COVID exposed the fragility. Ukraine reinforced it. Now DoD is actively investing to rebuild domestic production capacity across multiple sectors.
The numbers tell the story. DoD and other agencies invested approximately $3.2 billion through 222 investments in domestic industrial base companies between fiscal years 2018 and 2024. That's direct government investment in manufacturing capability, separate from contract awards.
Meanwhile, reshoring broadly has accelerated. The Reshoring Initiative tracked 244,000 manufacturing jobs announced in 2024 through reshoring and foreign direct investment. Since 2010, over 2 million such jobs have been announced as companies bring production closer to U.S. customers.
This isn't just talk anymore. Money is moving.
Where DoD Is Putting Resources
The priorities become clear when you look at where investments are flowing.
Critical minerals and materials: DoD awarded $94.1 million to E-VAC Magnetics to establish commercial-scale rare earth permanent magnet manufacturing in the United States. Another $90 million went to support reopening a North Carolina lithium mine. These aren't one-off grants. They're part of a systematic effort to build integrated domestic supply chains from raw materials through finished components.
Hypersonics: A presidential determination authorized Defense Production Act authorities specifically for air-breathing engines, advanced avionics, guidance systems, and constituent materials for hypersonic systems.
Workforce development: Even workforce training is getting DPA investment. Montana Tech received $6.56 million for a program in metallurgical, geological, mining, and environmental engineering. DoD recognized that production capacity means nothing without people who know how to do the work.
Electronics and precision manufacturing: The broader reshoring trend shows semiconductors, electric vehicles, aerospace, defense, and pharmaceuticals leading job announcements.
Why This Creates Contractor Opportunities
Here's where it gets practical.
Supply chain positioning: Prime contractors increasingly need domestic sources for components and materials. If your manufacturing capabilities align with defense priorities, you're solving a problem primes are actively trying to fix.
Subcontracting relationships: Large defense contractors are under pressure to demonstrate supply chain resilience and domestic sourcing. Smaller manufacturers with U.S.-based production have leverage they didn't have five years ago.
Direct DoD investment: DPA Title III programs aren't just for huge companies. The investments span companies of various sizes. If you have manufacturing capability in a priority area, there may be direct investment opportunities beyond traditional contracting.
Set-aside intersection: Many reshoring opportunities intersect with small business set-asides. If you're a certified small business with domestic manufacturing capability in a priority sector, you're positioned at the intersection of two major DoD priorities.
How to Position Your Business
Start with honest capability assessment. Reshoring opportunities favor manufacturers. If you're a services company, the direct opportunities are more limited. But if you manufacture anything, or if you provide technical services that support manufacturing, the landscape is shifting in your favor.
Identify your fit with priority sectors: The clearest opportunities are in defense-specific manufacturing like precision machined parts, electronic components, and specialty materials. But the ripple effects extend to supporting industries: industrial equipment, testing and measurement, logistics.
Document your domestic production: "Made in America" isn't just a marketing claim anymore. It's a competitive differentiator with teeth. Be specific about where your production happens and what percentage of your supply chain is domestic.
Understand the prime contractor pressure: Large primes are getting pressure from DoD about supply chain resilience. They need suppliers who reduce their risk, not add to it. Position yourself as the solution to their supply chain problem.
Watch the DPA investment announcements: The Office of Industrial Base Policy regularly announces new investments. These signal where DoD sees critical gaps and where they're willing to put money.
The Workforce Reality
One constraint affects everyone in this space. Manufacturing workforce shortages remain significant. According to Bureau of Labor Statistics data, approximately 415,000 to 460,000 manufacturing positions remained unfilled through mid-2025. While that's down from pandemic-era peaks near 1 million openings, it remains above the pre-pandemic average.
The longer-term picture is more concerning. Deloitte and the Manufacturing Institute project that 3.8 million manufacturing workers will be needed by 2033, with 1.9 million of those jobs potentially going unfilled if current trends continue.
This creates both challenge and opportunity. If you can attract and retain skilled manufacturing workers, you have an advantage many competitors struggle to match. If you're in a region with stronger workforce availability, that's worth highlighting to potential prime partners.
What Changes in 2026 and Beyond
The acquisition reform legislation working through Congress reinforces these trends. Both the SPEED Act and FoRGED Act emphasize supply chain resilience and domestic industrial base strengthening. Whatever final form the FY26 NDAA takes, these priorities will be embedded.
DoD is also restructuring how they define requirements and manage portfolios. The shift toward faster acquisition timelines means opportunities may emerge and close more quickly than traditional multi-year procurement cycles. Contractors who can demonstrate capability and capacity rapidly will have advantages over those who need extended ramp-up periods.
Getting Started
If reshoring opportunities fit your capabilities, there are concrete steps to take now.
Review your production footprint and supply chain. Document what's domestic, what's not, and what could be shifted. This becomes part of your competitive positioning.
Research which prime contractors work in your capability area and what supply chain pressures they face. Industry publications and conference presentations often reveal where primes are actively seeking new domestic suppliers.
Monitor Defense Production Act investment announcements through the Office of Industrial Base Policy. These signal both where DoD sees gaps and what capability areas are priorities.
Consider whether certifications like CMMC, already on your radar for cyber compliance, might also position you for opportunities in defense manufacturing supply chains where controlled unclassified information flows.
USFCR has helped over 300,000 businesses position for federal contracting success. If you're evaluating whether reshoring trends create opportunities for your manufacturing business, our specialists can help assess your positioning and identify practical next steps.
Speak to a USFCR Registration & Contracting Specialist
FAQ
What is defense industrial base reshoring?
Defense industrial base reshoring refers to the effort to bring manufacturing of defense-critical components, materials, and systems back to the United States. This includes both relocating production that moved overseas and building new domestic capacity in sectors where the U.S. became dependent on foreign sources.
Which sectors have the strongest reshoring opportunities?
Semiconductors, aerospace and defense manufacturing, electric vehicles and batteries, pharmaceuticals, and clean energy equipment lead current reshoring activity. Within defense specifically, precision manufacturing, electronic components, specialty materials, and critical minerals processing are priority areas.
How do small businesses benefit from reshoring priorities?
Small businesses with domestic manufacturing capability are positioned at the
intersection of two DoD priorities: small business participation goals and supply chain resilience. Prime contractors under pressure to demonstrate domestic sourcing increasingly seek small business suppliers who reduce rather than add supply chain risk.
What is the Defense Production Act Title III program?
DPA Title III authorizes federal agencies to invest directly in domestic industrial capacity for national defense purposes. Between 2018 and 2024, agencies provided $3.2 billion through 222 investments to strengthen domestic manufacturing in priority sectors.
How can I find reshoring-related contract opportunities?
Monitor Defense Production Act investment announcements from the Office of Industrial Base Policy, research prime contractor supply chain initiatives in your sector, and search SAM for opportunities emphasizing domestic sourcing or supply chain resilience requirements.
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