Released June 29, 2023 | SUGAR LAND
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Researched by Industrial Info Resources (Sugar Land, Texas)--Industrial Info was pleased to present a webinar this week regarding the outlook for the Industrial Manufacturing Industry, one of the busiest and most dynamic of the sectors tracked by Industrial Info. As new technologies and trends emerge, the Industrial Manufacturing Industry keeps pace, which drives project spending in the sector. Leading the discussion was Industrial Info's vice president of Industrial Manufacturing research, David Pickering.
Industrial Info is tracking about $865 billion in industrial manufacturing project starts planned for the next 12 months. A large number of these are for grassroot or brownfield projects, suggesting new facilities rather than plant expansions or unit additions.
Leading the industry in terms of spending are four sectors: automotive, semiconductors and computers, data centers, and heavy manufacturing. Together, these sectors account for more than half of the project spending in the coming 12 months. Each of these sectors has seen substantial changes over the past few years, helping drive higher spending.
Automotive
The rise of electric vehicles (EVs) is driving a great deal of spending in the automotive sector, although globally, projects involving the assembly of internal combustion engine (ICE) vehicles ($29.7 billion in the coming 12 months) surpasses that for EV assembly ($20.9 billion).
In addition to the new and modified assembly plants required for EVs, Industrial Info also is tracking a great deal of spending from tier automotive suppliers that are adding plants and equipment to meet the needs for the different components required by EVs compared with ICE vehicles.
This year, sales of EVs throughout the world are expected to increase 35% to 14 million units sold, compared with 10 million units last year, paving the way for increased activity from both automakers and tier suppliers.
Data Centers
Activity in the data center sector is being seen largely in Western nations with a strong infrastructure footprint. At the onset of the COVID-19 pandemic, when these nations turned online from everything from school and work to socializing, spending on data centers rose significantly. Until recently, this was expected to level off somewhat.
However, the rapid rise of artificial intelligence (AI) will continue to drive spending for data centers. Data centers incorporating AI require different technologies, and a tremendous amount of growth to incorporate this new trend is expected in the coming years, not only for new facilities, but also to keep existing data centers up to date. Many of these data centers will require newer and up-to-date semiconductors to help run increasingly demanding operations.
Semiconductors & Computers
Many semiconductor manufacturers are looking to reshore their fabrication plants to areas where demand for their products is strongest, i.e. North America and Europe. In the U.S., the CHIPS and Science Act, signed into law in 2022, greatly incentivizes semiconductor manufacturers to establish fabrication facilities in the U.S., which companies like Intel Corporation (NASDAQ:INTC) (Santa Clara, California), which is planning more than $35 billion in spending this year and next, have jumped on.
The semiconductor sector is in large part driven by other sectors such as automotive and data centers, which, as we have seen, require new technologies to keep up with changing trends.
Heavy Manufacturing
The heavy manufacturing sector also remains a strong spender globally. This sector differs from others in that there is less brownfield and grassroot activity and more in-plant spending and expansions. Much of the activity in this sector ($51.5 billion) is for storage batteries, not only for EVs, but also for items such as laptops, mobile phones and utility-scale power storage.
Conclusion
Industrial manufacturing is a fast-paced industry, with projects taking about 18 months from planning to construction start on average, making near-term spending predictions close to the mark. This year has brought strong activity from the industry, and this is expected to keep pace in 2024 and into the years beyond as the sector grows with a changing world.
If you missed this webinar or would like to listen to it again, it will soon be available in Industrial Info's On-Demand Webinar Library.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
Industrial Info is tracking about $865 billion in industrial manufacturing project starts planned for the next 12 months. A large number of these are for grassroot or brownfield projects, suggesting new facilities rather than plant expansions or unit additions.
Leading the industry in terms of spending are four sectors: automotive, semiconductors and computers, data centers, and heavy manufacturing. Together, these sectors account for more than half of the project spending in the coming 12 months. Each of these sectors has seen substantial changes over the past few years, helping drive higher spending.
Automotive
The rise of electric vehicles (EVs) is driving a great deal of spending in the automotive sector, although globally, projects involving the assembly of internal combustion engine (ICE) vehicles ($29.7 billion in the coming 12 months) surpasses that for EV assembly ($20.9 billion).
In addition to the new and modified assembly plants required for EVs, Industrial Info also is tracking a great deal of spending from tier automotive suppliers that are adding plants and equipment to meet the needs for the different components required by EVs compared with ICE vehicles.
This year, sales of EVs throughout the world are expected to increase 35% to 14 million units sold, compared with 10 million units last year, paving the way for increased activity from both automakers and tier suppliers.
Data Centers
Activity in the data center sector is being seen largely in Western nations with a strong infrastructure footprint. At the onset of the COVID-19 pandemic, when these nations turned online from everything from school and work to socializing, spending on data centers rose significantly. Until recently, this was expected to level off somewhat.
However, the rapid rise of artificial intelligence (AI) will continue to drive spending for data centers. Data centers incorporating AI require different technologies, and a tremendous amount of growth to incorporate this new trend is expected in the coming years, not only for new facilities, but also to keep existing data centers up to date. Many of these data centers will require newer and up-to-date semiconductors to help run increasingly demanding operations.
Semiconductors & Computers
Many semiconductor manufacturers are looking to reshore their fabrication plants to areas where demand for their products is strongest, i.e. North America and Europe. In the U.S., the CHIPS and Science Act, signed into law in 2022, greatly incentivizes semiconductor manufacturers to establish fabrication facilities in the U.S., which companies like Intel Corporation (NASDAQ:INTC) (Santa Clara, California), which is planning more than $35 billion in spending this year and next, have jumped on.
The semiconductor sector is in large part driven by other sectors such as automotive and data centers, which, as we have seen, require new technologies to keep up with changing trends.
Heavy Manufacturing
The heavy manufacturing sector also remains a strong spender globally. This sector differs from others in that there is less brownfield and grassroot activity and more in-plant spending and expansions. Much of the activity in this sector ($51.5 billion) is for storage batteries, not only for EVs, but also for items such as laptops, mobile phones and utility-scale power storage.
Conclusion
Industrial manufacturing is a fast-paced industry, with projects taking about 18 months from planning to construction start on average, making near-term spending predictions close to the mark. This year has brought strong activity from the industry, and this is expected to keep pace in 2024 and into the years beyond as the sector grows with a changing world.
If you missed this webinar or would like to listen to it again, it will soon be available in Industrial Info's On-Demand Webinar Library.
Industrial Info Resources (IIR) is the leading provider of industrial market intelligence. Since 1983, IIR has provided comprehensive research, news and analysis on the industrial process, manufacturing and energy related industries. IIR's Global Market Intelligence (GMI) helps companies identify and pursue trends across multiple markets with access to real, qualified and validated plant and project opportunities. Across the world, IIR is tracking over 200,000 current and future projects worth $17.8 trillion (USD).
