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Released July 15, 2021 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--All things considered, the Industrial Manufacturing Industry made it through 2020 in relatively good shape. According to David Pickering, Industrial Info's vice president of research for the industry, across the world, spending in the industry declined by about $20 billion, which is relatively modest on a global scale. He views 2021 as "recovery year" as sectors make adjustments to a changed world, with spending more or less at pre-pandemic levels next year. In a recent webinar, Pickering discussed where he sees the industry heading for the remainder of this year and into 2022.
In addition to touching on some of the larger trends being seen, Pickering dived down into some of the biggest movers and shakers of the industry, including data centers, warehousing and distribution, semiconductors and automotive.
Data Centers
Perhaps no sector has benefited more from the COVID-19 pandemic than data centers. Pickering said, "The COVID crisis really brought the data center sector to the forefront. Without these data centers, the switch to working from home and learning from home would not have taken place. We need that backbone of the internet as well as data storage, the 'cloud,' to be able to do what we do now." Pickering said the data center sector is one where heavy grassroot activity is still being seen in North America. These facilities are often planned in large, multi-phase projects, where a company will start with one or two data center buildings and then expand one building at a time as different phases are completed. Industrial Info tracked $11.9 billion of data center construction in 2019 and $9.8 billion in 2020. Around $15.9 billion in projects are planned for this year and $28.8 billion for 2022; however, not all of these planned projects will see the light of day. Nevertheless, this sector is expected to keep going strong into the near future.
Distribution & Warehousing
The need for data centers was in large part brought about as North America shifted to online shopping during the pandemic, and coupled with this is the need for new distribution and warehousing facilities to not only house products, but also to satisfy consumers' increasing demand for ever-faster delivery times. In the past, the focus was on larger distribution centers around major areas. While these "mega-centers" are still being built, there has been a shift to smaller, more regional facilities to ensure faster delivery times. Amazon.com Incorporated (NASDAQ:AMZN) (Seattle, Washington) has said it intends to construct approximately 1,500 to 2,000 of these smaller fulfillment centers across the U.S. in the next 18 months to two years. The U.S. Southeast market region is the largest spender in this category.
Semiconductors
Projects in this sector typically operate in 5- to 6-year cycles, where projects are developed as new technologies emerge, Pickering said. However, a global shortage of semiconductors has given this sector an artificial boost. In the spring of 2020, as COVID-19 grabbed hold of the world, chip demand declined and manufacturing closures occurred. However, by early summer, demand began to increase, especially as the world embraced the stay-at-home ethos. At industrial plants, new technologies were implemented, further driving up demand.
According to Goldman Sachs (NYSE:GS) (New York, New York), 169 sectors have been affected by the shortage, which has caused companies to boost semiconductor projects as they attempt to fill the gap. However, these projects take about 12 to 18 months to implement, so the shortage is expected to last into next year and possibly into 2023. The largest semiconductor manufacturer in the world, Taiwan Semiconductor Manufacturing Company (Hsinchu, Taiwan), has committed to invest $100 billion in the coming three years to increase production capacity, including a $12 billion grassroot plant in Arizona. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for the project report.
Automotive
The automotive sector has suffered from the semiconductor shortage, as new vehicles can require upward of 30 chips. The shortage has caused intermittent plant closures, as manufacturing is simply not possible. In addition, the interruption to the supply chain of other auto parts made in different global locations has caused disruptions. Despite these cuts and a drop in revenue in 2020, the sector is faring fairly well.
In 2020, the focus shifted to smaller, less high-dollar projects. There has been a shift from grassroot projects toward projects at existing plants, such as retooling and the addition of production lines.
The pandemic resulted in a slowdown in the rollout of electric vehicles (EVs) in North America. However, most of the major automakers have committed to changing all or a portion of their fleets to electric in the coming years. EV spending is expected to pick up as the goals approach. Pickering said, "What we're not seeing is a large number of grassroot plants planned as opposed to seeing plans to retool existing plants to produce those electric vehicles." Speaking of the EV market, he said, "It's coming; it just got delayed a little bit. We're still looking at a couple of years before we get vested in the actual production side."
If you missed this webinar or would like to listen all or a portion of it again, click here.
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.
In addition to touching on some of the larger trends being seen, Pickering dived down into some of the biggest movers and shakers of the industry, including data centers, warehousing and distribution, semiconductors and automotive.
Data Centers
Perhaps no sector has benefited more from the COVID-19 pandemic than data centers. Pickering said, "The COVID crisis really brought the data center sector to the forefront. Without these data centers, the switch to working from home and learning from home would not have taken place. We need that backbone of the internet as well as data storage, the 'cloud,' to be able to do what we do now." Pickering said the data center sector is one where heavy grassroot activity is still being seen in North America. These facilities are often planned in large, multi-phase projects, where a company will start with one or two data center buildings and then expand one building at a time as different phases are completed. Industrial Info tracked $11.9 billion of data center construction in 2019 and $9.8 billion in 2020. Around $15.9 billion in projects are planned for this year and $28.8 billion for 2022; however, not all of these planned projects will see the light of day. Nevertheless, this sector is expected to keep going strong into the near future.
Distribution & Warehousing
The need for data centers was in large part brought about as North America shifted to online shopping during the pandemic, and coupled with this is the need for new distribution and warehousing facilities to not only house products, but also to satisfy consumers' increasing demand for ever-faster delivery times. In the past, the focus was on larger distribution centers around major areas. While these "mega-centers" are still being built, there has been a shift to smaller, more regional facilities to ensure faster delivery times. Amazon.com Incorporated (NASDAQ:AMZN) (Seattle, Washington) has said it intends to construct approximately 1,500 to 2,000 of these smaller fulfillment centers across the U.S. in the next 18 months to two years. The U.S. Southeast market region is the largest spender in this category.
Semiconductors
Projects in this sector typically operate in 5- to 6-year cycles, where projects are developed as new technologies emerge, Pickering said. However, a global shortage of semiconductors has given this sector an artificial boost. In the spring of 2020, as COVID-19 grabbed hold of the world, chip demand declined and manufacturing closures occurred. However, by early summer, demand began to increase, especially as the world embraced the stay-at-home ethos. At industrial plants, new technologies were implemented, further driving up demand.
According to Goldman Sachs (NYSE:GS) (New York, New York), 169 sectors have been affected by the shortage, which has caused companies to boost semiconductor projects as they attempt to fill the gap. However, these projects take about 12 to 18 months to implement, so the shortage is expected to last into next year and possibly into 2023. The largest semiconductor manufacturer in the world, Taiwan Semiconductor Manufacturing Company (Hsinchu, Taiwan), has committed to invest $100 billion in the coming three years to increase production capacity, including a $12 billion grassroot plant in Arizona. Subscribers to Industrial Info's Global Market Intelligence (GMI) Industrial Manufacturing Project Database can click here for the project report.
Automotive
The automotive sector has suffered from the semiconductor shortage, as new vehicles can require upward of 30 chips. The shortage has caused intermittent plant closures, as manufacturing is simply not possible. In addition, the interruption to the supply chain of other auto parts made in different global locations has caused disruptions. Despite these cuts and a drop in revenue in 2020, the sector is faring fairly well.
In 2020, the focus shifted to smaller, less high-dollar projects. There has been a shift from grassroot projects toward projects at existing plants, such as retooling and the addition of production lines.
The pandemic resulted in a slowdown in the rollout of electric vehicles (EVs) in North America. However, most of the major automakers have committed to changing all or a portion of their fleets to electric in the coming years. EV spending is expected to pick up as the goals approach. Pickering said, "What we're not seeing is a large number of grassroot plants planned as opposed to seeing plans to retool existing plants to produce those electric vehicles." Speaking of the EV market, he said, "It's coming; it just got delayed a little bit. We're still looking at a couple of years before we get vested in the actual production side."
If you missed this webinar or would like to listen all or a portion of it again, click here.
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.
