#181 – Inside Our Industry – Manufacturing Momentum – Advanced Manufacturing Ascendancy in North America

Posted on | Inside Our Industry

Happy 2024! We would like to wish you all a happy, healthy, and prosperous New Year!

Newmark has released the first of a three-part Industrial Research series that explores advanced manufacturing growth in North America since 2020. We are sharing a few highlights below and will share the next two releases as they become available.

Manufacturing Momentum – Advanced Manufacturing Ascendancy in North America

Since 2020, hundreds of major new advanced manufacturing facility announcements have been made across North America, and with each comes investment, development, jobs and another step towards solidifying and expanding critical supply chains.

A snapshot of initial investments totaling a minimum of $100 million since 2020 reveals approximately $400 billion in advanced manufacturing investments pledged, 210,000+ new jobs and a minimum of 250 million square feet of new industrial projects – all to come between now and 2030.

What is driving momentum?

Trade tensions between the U.S. and China and the rising costs of Chinese labor were already established headwinds to the global supply chain status-quo at the onset of the pandemic in 2020. …Many firms are acting to bring production closer to consumption through reshoring, nearshoring, foreign direct investment and domestic expansion.

This paradigm-shaking volume of industrial-policy-driven public spending is already catalyzing private investment. Real private manufacturing construction spending grew at an annualized rate of 64.7% in June 2023, after having eclipsed $100 billion for the first time ever in April 2023.

Where is this growth happening?

A wide survey of major manufacturing announcements over the past three years reveals nearly every U.S. state has been a beneficiary of this growth, with the strongest concentration of projects spanning the Midwest down into the Southeastern states. Arizona and Texas lead in investment, boasting a combined $120 billion, and Texas, Georgia, and North Carolina all lead the country in sheer numbers of major manufacturing announcements, with 20+ investments of $100M or more pledged since 2020. Important factors driving geographical growth trends include availability of land, lower-cost power, logistics infrastructure, a favorable business environment and a supportive ecosystem from a labor perspective. In particular, access to skilled labor is an increasing concern for manufacturers.

A Note on Nearshoring

…Canada and Mexico are integral partners in the holistic North American manufacturing story and are experiencing dynamic nearshoring activity and foreign direct investment in manufacturing projects, especially to benefit from the United States-Mexico-Canada Agreement (USMCA), which was ratified in 2020.

…the impacts of nearing shore visible and measurable. Advanced manufacturing imports from Canada and Mexico into the U.S. have accelerated since 2020. In the first half of 2023, Mexico outpaced China to become the top advanced manufacturing exporter to the U.S., with imports from China declining 23% from the first half of 2022.

To view the full report that includes informative charts, graphs and maps, click here.