Manufacturers operate complex supply chains that, in many cases, involve the movement of raw materials and resources from different parts of the world into their factories.
It is an ever-moving puzzle. Indeed, manufacturing firms are often at the mercy of a range of factors outside of their control that can lead to disruptions, difficulties and, in extreme circumstances, halts in production.
A timely reminder of this came in March when a 400-meter-long container vessel, the Ever Given, ran aground in the Suez Canal, blocking the waterway that is responsible for the safe passage of billions of dollars’ worth of goods and materials every year. Around 12% of global trade, including 1 million barrels of oil and 8% of liquefied natural gas, passes through the canal each day.
The blockage, caused by high winds, took six days to unjam and even took a human life in the process. Hundreds of other vessels were also delayed, a pile up which is thought to have consisted of almost $10 billion of goods.
Meanwhile, as well as relying on the safe passage of goods from around the world, manufacturers are also having to take sustainability issues more seriously than ever before.
In November, world leaders, including President Joe Biden, gathered in the U.K. for the 2021 United Nations Climate Change Conference, better known as COP26. Here, several key pledges were made to help move the world toward carbon neutrality, and there is no doubt that private sector organizations will have to play their parts in helping societies to successfully transition. In many cases, this could mean reassessing supply chains and the origin of key materials.
Indeed, what if such materials were able to be sourced closer to home?
There are various studies pointing toward consumers’ willingness to pay a premium for more sustainable products. IBM, for example, found that 57% of consumers are willing to change their purchasing habits to reduce negative environmental impacts, with 70% saying they would pay a premium of 35 percent, on average, for brands which are sustainable. Cheaper sourcing from abroad, it seems, could be compensated by customers who are willing to pay more for home-grown products.
And the U.S. is home to an abundance of natural resources that are already supporting key manufacturing endeavors. Here, we explore just a few examples across states that can offer certain nearby manufacturers a competitive advantage.
FORESTRY
The U.S. is home to some vast areas of woodland that support key industries reliant on this versatile raw material.
Globally, demand for wood-based products is steady. Indeed, the wood manufacturing market is projected to reach $502 billion in value by 2027, up from $442 billion in 2020–growing at a compound annual growth rate of 1.8% during the period.
In America, according to the U.S. Forest Service, the forest products industry is among the top 10 manufacturing sector employers in 48 states. In terms of finances, this activity generates more than $200 billion a year in sales and pays about $54 billion in wages.
The total amount of land covered by forests in the country is estimated to be around 750 million acres, with Alaska by far the most forested state. Oregon and California follow in second and third respectively.
Several key industries are supported by this abundance of wood resources, including paper and pulp, furniture and construction. Moreover, around two thirds of American forested land is timberland, which is capable of producing industrially utilized wood.
AGRICULTURE
States home to a thriving agricultural scene could provide homegrown advantages to all manner of businesses, especially those operating in the food production supply chain.
While there are many factors which determine the attractiveness of an area in regard to farming, soil quality is arguably the most important.
In the U.S., mollisols are widely recognized to be the best growing soils due to a range of properties–namely, they are extremely fertile and of neutral pH.
Resultantly, they constitute a large part of the country’s Wheat Belt and the wheat-growing area of Palouse in eastern Washington, with Illinois and Iowa also home to this favorable farming soil.
Vermont is another state recognized for its high soil quality. While home to a variety, its official state soil is Tunbridge, which is described as “loamy and acidic” in nature. The state equally ranks highly across several factors such as farming infrastructure and investment.
Agriculture also thrives in Nebraska. Here, the official state soil is Holdrege, which facilitates high yields because of its natural fertility and excellent moisture retention capacity. This translates into financials, with Nebraska’s corn yields being the third largest in the U.S. and worth $6.3 billion in 2018.
California, however, is by far the country’s most prolific agricultural state. According to the latest figures from the U.S. Department of Agriculture’s Economic Research Service, California is responsible for 13.5% of all agricultural revenue in America.
In 2020, the state recorded receipts of more than $49 billion across all agricultural commodities, nearly double that of Iowa ($26.2 billion) and 2.5 times the value of agricultural activity in Texas ($20.2 billion).
There are many reasons why California is so well suited to growing crops. Not only is the western state home to some extremely fertile soil, but its climatic conditions also ensure the most is made of the quality of the land. It is the leading producer of a range of commodities, including wheat, lemons, oranges, grapes and avocados, and is among the most prolific grower of commonly consumed vegetables such as onions, lettuce, broccoli, carrots and mushrooms. Indeed, California produces more than 200 varieties of crops, with some being exclusive to the territory.
This translates into an enticing prospect for businesses which rely on or work with a vast array of farmed ingredients. Rather than ship them in from abroad, setting up or sourcing from closer to home could provide sustainability, financial and risk-reducing supply chain advantages.
MINERALS
As well as abundant forests and vast swathes of prime agricultural land, the United States is also home to an array of minerals that serve all kinds of industrial activities.
In 2020, mines across the country produced more than $82 billion worth of minerals, according to figures released in the 26th annual Mineral Commodity Summaries report from the USGS National Minerals Information Center.
“Industries–such as steel, aerospace and electronics–that use nonfuel mineral materials created an estimated $3.03 trillion in value-added products in 2020,” said Steven M. Fortier, director of the USGS National Minerals Information Center.
In terms of metals, mine production in 2020 was estimated to be $27.7 billion, which is around 3% higher than that in 2019.
Key contributors to this total value were gold (38%), copper (27%), iron ore (15%) and zinc (6%), with a total of 12 mineral commodities each having been mined at a value of more than $1 billion in 2020.
Geographically, several states are home to sizeable mineral mining activities. In 2020, 12 states each produced more than $2 billion worth of nonfuel mineral commodities. The states, ranked in descending order of production value, were: Nevada, Arizona, Texas, California, Minnesota, Florida, Alaska, Utah, Missouri, Michigan, Wyoming and Georgia.
It is also important to note that some industries in the U.S. rely heavily on imports. In 2020, imports made up more than one half of U.S. consumption for 46 nonfuel mineral commodities, with 17 minerals being wholly imported. These imported minerals are key materials for a range of industrial endeavors, including renewable energy generation and storage, as well as infrastructure technologies.
However, there is no doubt that the U.S. offers opportunities for enterprises reliant on a range of mineral resources, as shown by those 12 states that achieved more than $2 billion in output.
Here, we explore a few of the country’s most abundant and valuable mineral commodities:
Gold
Gold needs no introduction. One of the most iconic minerals, it has symbolized prosperity and formed the basis of currency through the ages.
However, gold also carries a huge number of industrial uses that stretch far beyond coinage and blocks being stored in bank vaults, thanks to a myriad of special and diverse properties that make it incredibly useful. Some of these include being a conductor of electricity, non-tarnishing, very easy to work and able to be drawn into wire and hammered into thin sheets. Moreover, gold can be melted and cast into highly detailed shapes, offering a unique and appealing color and a desirable sheen.
All of this means gold is highly sought after across many industrial practices and sectors. In electronics, for example, devices use very low voltages and currents which are easily interrupted by corrosion or tarnishing at various contact points. Gold is a reliable conductor that can overcome this problem. Indeed, it will be found in almost every sophisticated electronic device, from smartphones and calculators to GPS systems and home assistants like Alexa.
In terms of gold production in the U.S., the west of the country is where most deposits are found. Nevada and Alaska are the states that lead the production rankings from both lode mines and placer deposits, these feeding primarily into jewelry, electronics and coin-making activities.
In 2016, around $8.5 billion of gold was produced across the U.S., translating into 209 metric tons.
Crushed stone
Somewhat less glamourous than gold, crushed stone is an equally important mineral commodity produced in high quantities and serving critical industrial activity.
According to USGS National Minerals Information Center figures for 2016 (the most recent available), the value of American crushed stone output, which includes limestone, dolomite and granite, reached $16.2 billion.
The vast majority of crushed stone supplies the construction and ongoing upkeep of the United States’ transportation network. In 2016, more than three quarters of crushed stone went into road construction and maintenance, with another 11% going into cement manufacturing activities and 7% being used in lime production.
Companies working with these materials (especially those producing various construction aggregates) will therefore likely be based in states where crushed stone output is highest in order to gain a proximity advantage. This is important, as crushed stone is a heavy material of relatively low value per ton, meaning any savings that can be made on transport will greatly increase financial viability.
A handful of states are resultantly responsible for more than half of the U.S. production of crushed stone. These are Texas, Pennsylvania, Florida, Georgia, Illinois, Missouri, Ohio, North Carolina, Virginia and Kentucky. It should also be noted that small amounts of crushed stone are imported from the likes of Canada, Mexico and the Bahamas.
Copper
Another important mineral supplying the construction sector is copper. One of the first metals ever mined and used by humans, it has played an influential role in the shaping and evolution of civilizations.
It remains the fifth most valuable mineral mined in the United States. In 2016, 1.41 million metric tons were produced, generating $6.8 billion in revenue–most of it deriving from sites in Arizona, New Mexico, Utah, Nevada, Montana and Michigan.
Some 44% of this copper supported construction sector activities, with 19% being used in the production of transportation equipment and another 18% going into electric and electronic products.
