In a recent interview that has sent shockwaves through the business world, Kevin O’Leary, famed investor, entrepreneur, and star of Shark Tank, delivered some grim news about the future of a major U.S. industry. Known for his often blunt, no-holds-barred approach to financial commentary, O’Leary didn’t mince words when discussing the declining state of a key sector that has long been a pillar of the American economy. This is never coming back,” O’Leary said, referencing the manufacturing industry in the United States.

As a respected figure in the world of venture capitalism, O’Leary’s opinions carry weight, and his remarks have sparked widespread debate. But what exactly does O’Leary mean, and why does he believe that a cornerstone of the American economy is gone for good? In this investigation, we’ll dive into O’Leary’s warning, analyze the economic trends that may have led to this conclusion, and explore the broader implications for the U.S. economy moving forward.

The Decline of U.S. Manufacturing: A Decades-Long Trend

O’Leary’s declaration of the death of American manufacturing is not entirely without precedent. For the past several decades, the U.S. manufacturing sector has been in a steady decline. Once the beating heart of the U.S. economy, the manufacturing industry employed millions of Americans and fueled both domestic and global economic growth.

However, starting in the 1970s and accelerating in the 1990s, globalization and the rise ofoffshoring significantly impacted the sector. Companies began moving production overseas in search of cheaper labor, resulting in massive job losses in U.S. factories. By the 2000s, many iconic industries, including the automotive,textile, and electronics sectors, had shifted much of their operations abroad, primarily to China,India, and other low-wage countries.

According to U.S. Bureau of Labor Statistics, manufacturing jobs in the U.S. peaked in 1979 at around 19.6 million and have since dropped to approximately 12.3 million as of 2023, a significant decline. The trend reflects not only the outsourcing of jobs but also the rise of automation and technological advancements that have further reduced the need for manual labor in factories.

O’Leary’s comments tap into thisdecades-long decline. But what makes his recent statement so significant is that it indicates he believes the downturn is permanent, and the manufacturing sector will never return to its former levels of prominence.

What Exactly Did Kevin O’Leary Say?

During a recent appearance on CNBC, O’Leary was asked about his outlook on various industries in the wake of ongoing economic challenges, including inflation, supply chain issues, and global political instability. His response, particularly regarding the manufacturing sector, was blunt and unequivocal.

I’m telling you right now, this is never coming back. The American manufacturing industry has been destroyed by bad policies and globalization, and it’s gone. We need to stop pretending that we can bring it back. The jobs aren’t coming back, the factories aren’t coming back, and we’re not going to be able to reverse these trends. It’s time to accept that reality.”

O’Leary continued to stress the role of automation and technology in displacing factory jobs, further pointing out that even industries that are returning to the U.S. aren’t bringing back the kinds of jobs people expect.

We’re seeing some reshoring of manufacturing, but it’s going to be very different. The jobs that were lost will not come back in the same form. We’re seeing high-tech factories, but those will be run by robots, not humans. This is the reality of the new global economy.”

Understanding O’Leary’s Perspective: The Impact of Globalization and Technology

O’Leary’s statement is based on a number of economic realities that have shaped the fate of U.S. manufacturing in the 21st century. Let’s break down the key factors that contribute to his grim outlook:

Globalization and the Offshoring of Jobs

The first major wave of job outsourcing began in the1980s and 1990s when many U.S. companies realized they could drastically cut costs by moving production to countries with cheaper labor forces. Countries like China, Mexico, andIndia became prime destinations for offshoring, with businesses seeking lower wages, fewer regulations, and access to growing international markets.

As a result, manufacturing jobs, particularly in industries like automobiles, electronics, and consumer goods, moved abroad. The North American Free Trade Agreement (NAFTA), signed in 1994, further accelerated this process, making it easier for companies to move production to lower-cost regions.

andjob displacement for millions of American workers. Despite efforts to bring some manufacturing back to the U.S., such as through tariffs and incentives forreshoring, O’Leary argues that the real value in manufacturing has shifted overseas and will never return to its previous levels.

Automation and the Changing Nature of Work

Even when manufacturing is reshored, it is unlikely to bring back the same level of human labor that once existed. O’Leary is especially concerned with the increasing role of automation in the modern manufacturing process. Robots, artificial intelligence (AI), and machine learning are transforming factories into highly automated, high-tech operations. This shift has created the need for a highly skilled workforce to manage and maintain these machines, rather than the large, low-skill labor forces that were once common.

Robotics and AI-powered machinery are also making factories far more efficient, requiring fewer workers. While some argue that automation could increase productivity and lead to new types of jobs, O’Leary believes the net effect will be along-term decrease in employment within the manufacturing sector.

The future of manufacturing is robots and artificial intelligence. Even if you bring some factories back, you’ll only need a fraction of the labor force to operate them. Those factory jobs are gone, and the ones left are high-tech and require specialized skills that the average worker doesn’t have.”

Political and Economic Factors

O’Leary also criticizes what he sees asineffective U.S. policies that have exacerbated the decline of American manufacturing. For example, high labor costs, rigid regulations, and environmental restrictions have made it more expensive to produce goods in the U.S. compared to countries with fewer restrictions. While many of these policies were put in place to protect workers and the environment, O’Leary argues that they inadvertently made the U.S. less competitive in global markets.

Additionally, he points to the rise of trade wars and tariffs as factors that have disrupted global supply chains and made it harder for U.S. manufacturers to compete with international counterparts. Though some policies, like the USMCA (United States-Mexico-Canada Agreement), have aimed to address these issues, O’Leary remains skeptical about their effectiveness.

The Future of U.S. Manufacturing: Is There Hope?

While O’Leary’s statement may seem final, it’s important to consider the counter-arguments. There is no doubt that the manufacturing landscape in the U.S. has shifted dramatically, but many believe that there is still room for growth, especially in advanced manufacturing and tech-driven sectors.

For example, the rise of electric vehicles (EVs), green energy, andsemiconductor production is providing new opportunities for U.S. manufacturers to reassert themselves in high-value industries. Tech giants like Apple and Intel have also been reshoring some of their production, citing both supply chain issues and the desire to maintain a closer relationship with their customers.

Additionally, government incentives aimed at stimulating U.S. manufacturing, such as the CHIPS Act, are pushing the nation to become more self-reliant in critical sectors like semiconductors and renewable energy. The growing focus on sustainability and domestic supply chains could provide a much-needed lifeline for certain types of manufacturing in the U.S.