Episode #58: Supply Chain Cartels, New Factories, Tax Incentives, Freight Tightening, & the Tacit Knowledge Bottleneck
In this episode, Matt Horine aggregates major manufacturing headlines and argues the U.S. industrial rebuild is already underway, with constraints shifting from politics and capital to operations. It highlights a DOJ Sherman Act indictment alleging four container makers controlling ~95% of global dry containers colluded to cap output and double prices during 2019–2021, underscoring supply-chain dependency risks and the reshoring rationale. It covers JetZero’s planned 3M-sq-ft Greensboro, NC aircraft factory ($4.7B investment, 14,500 jobs, AI/digital with Siemens) and SendCutSend’s rapid-growth on-demand manufacturing model, which raised $110M at a $1B+ valuation. The host says tariff-driven inflation fears haven’t materialized in core goods CPI, and reviews the “one big beautiful bill” restoring permanent 100% bonus depreciation, expensing for production property and domestic R&D, and EBITDA-based interest limits. Freight data shows tightening trucking capacity and rising tender rejections, and a Fortune argument that tacit operating knowledge—not equipment—is the key bottleneck, with AI positioned to capture and scale it.
Links
- Matt Horine on LinkedIn
- Matt Horine on X
- Veryable Is Revitalizing U.S. Manufacturing
- Navigating Trump 2.0
- Sign Up on the Veryable Platform
Timestamps
- 00:00 Welcome and Format Shift
- 00:56 Trucking Safety Wins
- 01:14 Week’s Big Themes
- 02:08 Container Cartel Exposed
- 03:45 Why Reshoring Matters
- 04:54 JetZero Factory Build
- 06:08 SendCutSend Scales Up
- 07:18 Tariffs vs Inflation Data
- 09:14 Tax Code CapEx Boost
- 11:23 Freight Market Tightening
- 13:36 AI and Tacit Knowledge
- 15:42 Wrap Up and Next Steps
Episode Transcript
Matt Horine: [00:00:00] Welcome to US Manufacturing Today, the podcast powered by Veryable, where we talk with the leaders, innovators, and change makers, shaping the future of American industry, along with providing regular updates on the state of manufacturing, the changing landscape policies and more.
A bit of a different format this week as we seek to aggregate some of the biggest stories and headlines below the surface across some of the best sources out there. Freight Waves, Zero Hedge, Manufacturing Dive, The Best of X, formerly Twitter, and digest this as part of a reindustrialization sensing session about broader macro trends and how they are impacting manufacturing in ways that aren't always top of the fold.
Last week, we recast American Truckers United, a favorite episode that called out the degradation of high-trust institutions in the CDL world and how ATU was early in the calls for better enforcement and restoration of the American trucking industry. Huge progress after the Supreme Court decision that could find brokers held liable for highway safety.
You're seeing the whole of government line up behind that now and really dig into states like [00:01:00] California and New York that have issued these licenses and made our roadways more dangerous. So a huge shout-out to Shannon Everett and the team at ATU, absolute patriots. This week was a particularly dense news week otherwise, and today we are covering everything from a DOJ indictment that exposed one of the biggest supply chain cartels in history and the lessons that teaches us about reshoring, to the first greenfield large aircraft factory built in this country in a generation, and a tax provision that's fundamentally changing how manufacturers think about capital deployment.
There's a through line running through all of it, and I wanna take you through the stories that I think matter most, and more importantly, what they add up to. And that through line is this, the industrial rebuild of America is no longer a forecast. In fact, it is in progress, and the capital is committed, and the policies are in place, and the factories are going up.
The constraints are no longer political or financial, but they are operational. And that is exactly where this show seeks to reinforce the people actually doing the work and reward them for trusting the plan. So [00:02:00] let's get into it. The first story is about supply chain dependency and how a DOJ indictment shows us what really matters.
On Monday, the Department of Justice unsealed a Sherman Antitrust Act indictment against four of the world's largest shipping container manufacturers, China International Marine Containers, Tsingamas, Dongfang, and CXIC, along with seven of their executives, including three sitting CEOs. The alleged conspiracy began in November of twenty nineteen.
These companies agreed to limit the number of production shifts each line could run, installed surveillance cameras across their factories to police compliance, banned construction of new container facilities, and imposed financial penalties on any member that exceeded output quotas Together, these four companies manufactured approximately 95% of the world's standard dry shipping containers at the time of the alleged conspiracy.
And then COVID hit, which is an era absolutely ripe with fraud. This story is no different. Between [00:03:00] 2019 and '21, the DOJ alleges the cartel roughly doubled the price of standard shipping containers during the exact window when every manufacturer in the world was scrambling to move goods to market.
CIMC's profits grew from $19.8 million to $1.75 billion in two years. That is a 100-fold increase. Tsingamas went from one $10 million loss to nearly $190 million in profit. One executive, Tsingamas marketing director, was arrested in France in April. The case was filed under seal in early 2024 and un- only unsealed this week.
So here's what I wanna take from this. The reshoring thesis isn't just about tariffs or labor costs or patriotism. It's about what happens when 95% of the world's supply of something critical sits inside a single geography, and that geography decides it's time to extract value. There are a lot of bad actors out there.
They installed cameras to make sure their own people weren't cheating on the cartel. While the world was in crisis, they were enforcing output quotas. That's what concentrated supply [00:04:00] chain dependency looks like when the pressure is on. Now, take that and extrapolate it over all of our industrial products and think about what could be going on.
Domestic production, domestic supply chains, domestic labor infrastructure. These aren't talking points. They're how you build a supply chain that doesn't have a 95% concentrated foreign choke point waiting to be exploited the next time the world goes sideways. Now let's talk about the build. It's real, and we're gonna talk about two companies that are advancing that agenda, and those stories are putting the reshoring build into a sharp focus.
One is the largest greenfield manufacturing commitment in a state's history, and the other is institutional venture capital repricing the on-demand American manufacturing model at billions of dollars. We'll start with JetZero. In June, which is next month, they break ground on a three-million-square-foot aircraft manufacturing facility at the Piedmont Triad International Airport in Greensboro, North Carolina.
The Z-4 is the first clean-sheet large commercial aircraft designed in America in roughly fifteen years. Blended wing body [00:05:00] design, fifty percent better fuel efficiency than conventional tube-and-wing jets, two hundred and fifty passengers, five thousand nautical mile range. United Airlines has a hundred conditional orders.
Alaska Airlines is in. Fourteen airlines have joined the working group. The Greensboro facility is a four point seven billion dollar investment. It's the largest single manufacturing commitment in the state of North Carolina's history. Fourteen thousand five hundred direct high-tech jobs. The state put in one point five billion in incentives, and the factory is designed to be fully digital and AI-driven from day one, built in partnership with Siemens.
JetZero's explicit goal is to ramp faster and cut unit costs faster than legacy OEMs, and that's only possible with a labor strategy that can flex without adding permanent he- overhead before volume is confirmed and using the most advanced AI possible. Now, the second story, send, cut, send, something that we're all familiar with in the manufacturing world.
It's a quote from the Wall Street Journal, Journal called a Reno [00:06:00] fabrication company. They do a lot more than that. Laser cutting, CNC machining, sheet metal, titanium, carbon fiber, that can ship parts in as little as twenty-four hours. They crossed a hundred million dollars in revenue in October of twenty twenty-five, growing at roughly one hundred percent year over year.
This week, they closed a hundred and ten million dollar funding round at an over billion dollar valuation and co-led by names that are more familiar in the venture capital space, Paradigm and Sequoia. Sequoia just valued the on-demand manufacturing model in the billions of dollars, and that's not a niche bet.
That's institutional validation of the structural thesis that distributed, flexible, fast-response American industrial capacity is worth investing in at scale. Both stories point to the same truth. The build is real, the capital is here, and the constraint is no longer whether we will build, it's whether we can operate what we're building.
Shifting back now to a little bit more about tariffs and a doomsday scenario that didn't happen. The single loudest argument against reshoring investment over the past two [00:07:00] years has been the tariff inflation narrative. The logic went something like this: tariffs would raise the cost of imported inputs and trigger a domestic cost spiral that would make reshoring math unworkable.
If everything costs more at home, why would you bring it home? The April CPI data says otherwise. While the headline inflation came in at three point eight percent, which is the highest in about three years, this is what the headline misses. Energy prices are what drove more than forty percent of that monthly increase, and we've said all along that energy input cost and the drive to have American energy dominance is critical for dropping inflation.
But because of the situation in Iran and the Strait of Hormuz, the gasoline cost is up twenty-eight percent year over year But that is not a tariff story. If you strip out food and energy, which is core CPI, and you get up to about two point eight percent annually. Within core, goods prices were essentially flat.
New vehicles were down to a quarter of a percent. Used vehicles were flat. Household furnishings were declining. The [00:08:00] categories showing tariff fingerprints are narrow and specific. Apparel was up for slightly. Some food items with direct country of origin exposure were up slightly. But Ersun Youn's analysis showed that tariff-induced pressures may have peaked.
The tariff doomsday narrative that reshoring would make economically impossible by import cost spirals has not materialized in the core goods data. For manufacturers doing reshoring math right now, that's a green light. The cost competitiveness case for domestic production is intact, and the companies executing on it today will be ahead of the cycle when input costs normalize further.
The fear was real, but the outcome so far is not that the fear was real. Shifting a little bit back to last year and when we talked about the one big beautiful bill And the potential for it to make every factory investment immediately deductible is now starting to materialize. If you're a manufacturer and you haven't read the capital investment provisions of the One Big Beautiful Bill, you need to.
This is the tax story of the decade for American manufacturing, and it's been underreported relative [00:09:00] to its actual significance. The bill signed July fourth of last year permanently restored one hundred percent bonus depreciation for qualifying assets. Under the prior Tax Cuts and Jobs Act trajectory, bonus depreciation was phasing down to about forty percent in twenty twenty-five, twenty percent in twenty six, and zero after that.
The bill stopped the phaseout entirely, the One Big Beautiful Bill did. A five million dollar equipment purchase that previously generated depreciation deductions spread over seven years now generates a five million dollar deduction in year one. But it goes further. The bill also introduced a new one hundred percent qualified production property deduction.
Immediate full expensing of non-residential real estate used as an integral part of manufacturing, production, or refining for construction that begins before January of twenty thirty-four. The interest expense limitation was shifted to EBITDA. Significant structural change for capital-intensive manufacturers who carry heavy depreciation and domestic R&D expensing was restored.
You can immediately expense [00:10:00] domestic research and development costs again rather than capitalizing and amortizing them. The CBO projected the full One Big Beautiful Bill would add about one percentage point to real GDP in twenty twenty-six. Caterpillar and Deere have both cited the one hundred percent bonus depreciation provision as a driver of swelling order books.
And here's the piece that matters most, certainty. For the first time in nearly a decade, CFOs are planning three to five-year capital programs against a stable, known tax environment. The provision is permanent, not an annual extension, and it's not subject to a political sunset. That certainty is itself a CapEx accelerant.
Lines that were borderline at forty percent bonus depreciation are clearly viable at one hundred percent. Every investment decision that gets pulled forward is a ramp event that needs something like flexible labor before it needs permanent headcount Now shifting back again to the freight story because it's tightening from both sides and it's structural.
We brought this up a number of times where it seemed more situational, but now we can identify it as [00:11:00] structural. Those freight data points this week together paint a picture that every manufacturer with outbound logistics exposure needs to understand. First, the Sonar Outbound Tender Rejection Index hit sixteen point two percent this week.
A new cycle high, up nearly ten points in six months. That means carriers are rejecting more than one in six contract loads. When carriers can do that and stay fully utilized, they have real pricing power. Shippers depending on routing guide compliance are absorbing spot market exposure and cost overruns they hadn't planned for.
The second story, and this is published in Freight Waves, was an analysis this week documenting the deferred maintenance crisis accumulating during the twenty-twenty two through twenty-six freight recession. During the down cycle, tight carrier margins forced widespread deferral of equipment maintenance across the industry.
The current vehicle out of service rate stands at twenty-one point six percent across three point three million inspections. Nearly one in five commercial trucks on US roads is failing to meet [00:12:00] basic roadworthiness standards. The FMCSA's Road Check Blitz, which ran May tenth through the seventeenth, produced thirty-eight thousand nine hundred and twenty-six inspections, more than sixty-nine thousand violations, and thirteen thousand two hundred and seventy-three out of service orders.
The next safety measurement system update is June eighth when those results hit carrier CSA scores. Carriers whose scores rise face tighter insurance terms and potential routing guide exclusion. These two data points are connected. The supply side of trucking capacity is being syst-systematically tightened by enforcement.
The demand side is being expanded by reshoring driven freight growth. That combination produces sustained rate increases and persistent routing guide failures for the foreseeable future. The manufacturers who insulate themselves from this volatility are the ones hitting production throughput targets consistently, keeping trucks loaded on schedule, reducing the spot market exposure that comes with production misses.
Veryable labor matches that production to actual [00:13:00] demand, and it's how you can keep your carriers on your routing guide when sixteen percent of loads are being rejected elsewhere, a major component to being able to navigate this, this squeeze. Now shifting the story a little bit, and I wanna close on a story that is pretty important because of the conversations that we've had on this show about AI, but it was from someone named Brett Winton, who is a manufacturing AI investor, and he published the piece in Fortune making the case that the binding constraint on the American reshoring boom is not physical.
The factories are going up, the machines are being ordered, the capital, as we've talked about, is arriving at scale. What's missing is the accumulated tacit knowledge of how to run them. He's talking about the knowledge that lives in the heads of experienced machinists, process engineers, and production managers who have been doing this for decades.
How to quote for new work, how to program the job, how to avoid scrap, how to work around machine quirks, and how to iterate faster than the competition. None of that has been systematically captured. It lives still in people, and his argument is that AI is actually the [00:14:00] unlock, not as a replacement for that knowledge, but as the system that finally captures and scales it.
Manufacturing is the last major sector where expert judgment hasn't been encoded into repeatable systems at scale. But here's the angle that most people miss. If tacit knowledge is the binding constraint on the American manufacturing ramp, then the value of a credentialed, experienced operator, someone who has worked hundreds of production operations across multiple facilities running similar processes, is higher than it's ever been, counter to the narrative about AI and some of the manufacturing work.
That operator doesn't bring labor to the equation. They bring process intuition that a new hire doesn't develop for months. They bring pattern recognition that prevents the expensive mistakes that happen when people are learning on the job during a ramp. The reshoring wave is broadening from semiconductors into aerospace, pharma, defense, and energy infrastructure.
Every new facility that comes online goes through the same sequence: construction, commission, ramp, and then hopefully getting to steady state. The ramp phase is where the knowledge bottleneck is the [00:15:00] sharpest, and the ramp phase is where flexible credentialed manufacturing operators can really make the difference in this age of AI.
The DOJ indictment reminds us of why dependency is dangerous. JetZero and Senkensen tell us that the build is real and capital believes in American reshoring. The CPI data tells us the cost case for domestic production is intact. The one big, beautiful bill and policy tells us the tax code is now permanently aligning with investment acceleration into American manufacturing.
The freight data is telling us execution consistency has a direct dollar value in the transportation market. And Brett Winton's frame from the Fortune article tells us that in the next phase of the American industrial rebuild, the most valuable thing on a factory floor is not the equipment, it's the knowledge to run it.
They are not separate stories. They are chapters in the same story. American manufacturing is being rebuilt faster, broader, and more capital-intensive than most people outside this industry understand. And our job as operators and leaders is to make sure we're equipped to execute when the moment arrives, because the moment is finally arriving
To stay ahead of the curve and to help plan your strategy, please check out our [00:26:00] website at www.veryableops.com and under the resources section titled Trump 2.0, where you can see the framework around upcoming policies and how it will impact you and your business. If you're on socials, give us a follow on LinkedIn, X, formerly Twitter, and Instagram. And if you're enjoying the podcast, please feel free to follow the show on Apple Podcasts, Spotify, or YouTube, and leave us a rating and don't forget to subscribe. Thank you again for joining us and learning more about how you can make your way.