America’s multi-decade manufacturing slump could end soon, with up to 250,000 new jobs added to the sector over the next two years, according to an estimate from Goldman Sachs.

The New York-based investment bank thinks that favorable government policies and new investments in semiconductor and green technology will translate into more manufacturing jobs.

Currently, slightly less than 13 million Americans work in manufacturing.

If Goldman’s estimates are correct, between 200,000 and 250,000 additional jobs will be created. That’s about 2% growth.

The rosy outlook signals that factory jobs are about to make a strong comeback. But the growth won’t be even across all states.

In fact, about a third of the jobs created could be in just one state.

The rise of the Sun Belt

The heart of U.S. manufacturing used to be the Midwest. Michigan, Indiana, Illinois, Ohio, Pennsylvania.

Not anymore.

Manufacturers are moving to warmer states because they have greater incentives, more workers and a better economy.

America’s Sun Belt is a vast region that extends across 18 states. From California all the way to Florida.

The warm weather gives more people a reason to move and put down roots there.

Businesses are doing the same thing.

Out of all the Sun Belt states, Arizona could see by far the biggest influx of new factory jobs, according to Goldman.

That’s because about a third of all private investment in green and semiconductor technology will occur there. You can thank chipmakers like TSMC and Intel for that.

Since 2021, Arizona has attracted more than $58 billion in private investments for manufacturing. TSMC just pledged $26 billion. Intel plans to invest an additional $20 billion.

More jobs than we can fill?

Goldman’s projections actually call for much higher than 250,000 new jobs.

The problem is there aren’t enough people to fill all the positions that the new factories will create.

If we look at historical data, every $1 million increase in manufacturing construction leads to about nine new manufacturing jobs.

Nationwide spending is going to be around $65 billion. So, in theory, that should create about 585,000 new jobs.

Goldman blames “labor supply bottlenecks” for why actual employment growth will be much slower.

That’s a fancy way of saying there aren’t enough qualified workers and it’s hard to lure employed people from their existing jobs.

So, why the sudden surge in manufacturing, and why didn’t it happen years ago?

It’s all about government policy.

President Biden’s Inflation Reduction Act may have little to do with inflation, but it’s giving businesses incentives to invest in renewable energy, batteries, electric vehicles and semiconductors.

So, unlike the manufacturing production of the 1940s and 1950s, the new factories will create high-tech products, electric vehicles and alternative fuel sources.

Manufacturing is making a comeback, but it’s looking like a new industry than the giant, ominous factories of decades past.