Released April 16, 2019 | SUGAR LAND
en
Researched by Industrial Info Resources (Sugar Land, Texas)--One of the larger issues surrounding the U.S. Industrial Manufacturing Industry is the trade war with China, and perhaps a future drive for tariff increases with the European Union. In spite of this, Industrial Info's vice president of research for the Industrial Manufacturing Industry, David Pickering, expects spending in the industry in 2019 to be up from 2018. Pickering said, "The trade war is not having a detrimental effect right now. That could certainly change at the drop of a hat if the negotiations...take a bad turn." However, said Pickering, the industry remains incredibly healthy when it comes to spending.
Industrial Info's coverage of the Industrial Manufacturing Industry encompasses a wide range of sectors, including automotive, distribution and warehousing, heavy manufacturing, transportation systems and more. In Industrial Info's most recent webinar, Pickering and Shaheen Chohan, vice president of global analytics, discussed the spending outlook for this industry in North America.
Click on the image at right for a breakdown by sector of Industrial Manufacturing projects in the planning and engineering stages.
Automotive
While automotive spending will decline a bit this year from last year, it is only falling to typical spending levels of about $9.5 billion. The highest-spending regions for the automotive sector include the traditional Great Lakes region, as well as the U.S. Southeast, which has found a home with foreign automakers. Pickering said that before the Great Recession of a decade ago, many automakers were spending a lot on grassroot plants. The recession forced automakers to reevaluate their spending habits, and they now tend to perform retooling and upgrade projects at existing plants.
Distribution and Warehousing
The largest sector of this segment of the Industrial Manufacturing Industry is data centers, which require large amounts of power, necessitating these specialized facilities to construct their own power source or make arrangements with utilities, increasing spending in the Power Industry. In addition to data centers, e-commerce is helping drive the need for distribution facilities. Pickering said, "That means in those centralized cities that are distribution hubs for the whole country like St. Louis, Denver, Chicago, [and] Dallas, we're seeing a surge in spending because all the transportation modes meet there, and product is separated out to go to its final delivery location."
Semiconductors and Computers
Spending in the semiconductors and computers segment is cyclical, and we're currently in an up-cycle. Pickering said, "Every five to seven years, they go through a burst of spending, and the reason is these companies are constantly developing new microchips." Spending occurs when new technologies become inexpensive enough to manufacture on a large scale. "We're seeing a huge uptick in spending as they upgrade their facilities to be able to handle production of the next generation of chipset they're going to release to the public," said Pickering, who said as people become more attached to technology, spending remains strong. Spending is expected to slow down in coming years, but then as new technologies become feasible to develop, will pick up in 2023 or 2024 as the cycle repeats itself.
Transportation Systems
Pickering said there are lot of environmental and security projects underway at North American ports. There also is a lot of spending on passenger rail projects. Pickering said, "Those projects tend to be more expensive than the fright rail projects. Also, the passenger rail projects are the projects that rely on public funding, either at the local, state or federal level. ... These projects are lengthy to permit and lengthy to construct given the nature of what they have to accomplish. ...Freight rail tends to be less expensive since those projects are done by freight rail companies themselves," leading to smaller projects.
Microgrids
While not the highest-spending sector in the Industrial Manufacturing Industry, Pickering said this is a sector to keep your eye on. When asked why the microgrid segment was taking off, Pickering said, "Frankly it can be attributed to Hurricane Sandy, which is really what drove the country to sharpen their focus on the emergency power needs of critical infrastructure. Sandy shut down New Jersey Transit, which has thousands of miles of subway track and rail lines that people are using on a daily basis to get to and from work. When it shut down because all their power went out, it brought the region to a standstill, and as a result of that, the interest in microgrids came to the forefront."
Most of the spending in this segment is concentrated in the West Coast, New England and Northeast market regions. Pickering continued, "It's become a mandate by our government that every military base has a microgrid so they don't go offline. Ports have microgrids. All of the critical government infrastructure, such as research labs, have to have power that can never go offline, and that's what a microgrid is for. We're only going to see more and more spending in this particular sector."
To listen to this and other webinars on different industrial sectors, visit Industrial Info's on-demand market outlook library.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
Industrial Info's coverage of the Industrial Manufacturing Industry encompasses a wide range of sectors, including automotive, distribution and warehousing, heavy manufacturing, transportation systems and more. In Industrial Info's most recent webinar, Pickering and Shaheen Chohan, vice president of global analytics, discussed the spending outlook for this industry in North America.
Click on the image at right for a breakdown by sector of Industrial Manufacturing projects in the planning and engineering stages.Automotive
While automotive spending will decline a bit this year from last year, it is only falling to typical spending levels of about $9.5 billion. The highest-spending regions for the automotive sector include the traditional Great Lakes region, as well as the U.S. Southeast, which has found a home with foreign automakers. Pickering said that before the Great Recession of a decade ago, many automakers were spending a lot on grassroot plants. The recession forced automakers to reevaluate their spending habits, and they now tend to perform retooling and upgrade projects at existing plants.
Distribution and Warehousing
The largest sector of this segment of the Industrial Manufacturing Industry is data centers, which require large amounts of power, necessitating these specialized facilities to construct their own power source or make arrangements with utilities, increasing spending in the Power Industry. In addition to data centers, e-commerce is helping drive the need for distribution facilities. Pickering said, "That means in those centralized cities that are distribution hubs for the whole country like St. Louis, Denver, Chicago, [and] Dallas, we're seeing a surge in spending because all the transportation modes meet there, and product is separated out to go to its final delivery location."
Semiconductors and Computers
Spending in the semiconductors and computers segment is cyclical, and we're currently in an up-cycle. Pickering said, "Every five to seven years, they go through a burst of spending, and the reason is these companies are constantly developing new microchips." Spending occurs when new technologies become inexpensive enough to manufacture on a large scale. "We're seeing a huge uptick in spending as they upgrade their facilities to be able to handle production of the next generation of chipset they're going to release to the public," said Pickering, who said as people become more attached to technology, spending remains strong. Spending is expected to slow down in coming years, but then as new technologies become feasible to develop, will pick up in 2023 or 2024 as the cycle repeats itself.
Transportation Systems
Pickering said there are lot of environmental and security projects underway at North American ports. There also is a lot of spending on passenger rail projects. Pickering said, "Those projects tend to be more expensive than the fright rail projects. Also, the passenger rail projects are the projects that rely on public funding, either at the local, state or federal level. ... These projects are lengthy to permit and lengthy to construct given the nature of what they have to accomplish. ...Freight rail tends to be less expensive since those projects are done by freight rail companies themselves," leading to smaller projects.
Microgrids
While not the highest-spending sector in the Industrial Manufacturing Industry, Pickering said this is a sector to keep your eye on. When asked why the microgrid segment was taking off, Pickering said, "Frankly it can be attributed to Hurricane Sandy, which is really what drove the country to sharpen their focus on the emergency power needs of critical infrastructure. Sandy shut down New Jersey Transit, which has thousands of miles of subway track and rail lines that people are using on a daily basis to get to and from work. When it shut down because all their power went out, it brought the region to a standstill, and as a result of that, the interest in microgrids came to the forefront."
Most of the spending in this segment is concentrated in the West Coast, New England and Northeast market regions. Pickering continued, "It's become a mandate by our government that every military base has a microgrid so they don't go offline. Ports have microgrids. All of the critical government infrastructure, such as research labs, have to have power that can never go offline, and that's what a microgrid is for. We're only going to see more and more spending in this particular sector."
To listen to this and other webinars on different industrial sectors, visit Industrial Info's on-demand market outlook library.
Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.
