The US Manufacturing Renaissance means more than building factories.
US Factory construction hit a high in May 2023, thanks to favorable economic trends, trade tensions driving a reshoring movement, and strong support from initiatives like the Inflation Reduction Act and the CHIPS Act.
Recent months have been softer because of labor and materials shortages, as general contractors and their supply chains adjust to longer-term buoyancy in manufacturing construction. 2024 is forecast to be a record year.
For the US manufacturing renaissance to pan out, growth and change need to happen beyond the construction industry. Machinery makers, labor and education, and software vendors also need to transform.
The surge in factory construction fuels demand for industrial machinery.
New Factories require a wide array of machinery to start operations, ranging from robotics and assembly lines to processing and packaging equipment. And they require cutting-edge machinery.
Factories in high-tech sectors like semiconductor manufacturing or electric vehicle production seek the latest in industrial machinery that offers greater efficiency, precision, and integration with IoT and AI capabilities.
This push for cutting-edge equipment in turn drives machinery manufacturers to innovate, leading to a cycle of continuous improvement in the market. Beyond just expanding the industrial machinery market the manufacturing renaissance is also elevating the technological standards of the equipment manufactured.
The expansion of factory construction impacts the labor market.
As new manufacturing facilities are built, there's an immediate need for construction workers, engineers, and project managers to bring these projects to life.
Once the factories are operational, the demand shifts towards hiring skilled laborers, technicians, maintenance staff, and operational management to run the day-to-day activities.
This surge in employment opportunities doesn't stop at the factory gates; it also stimulates job creation in logistics, supply chain management, and support services like catering and security. Moreover, the technological advancements in and around new factories increase the demand for workers with specialized skills in automation, robotics, and data analysis, encouraging workforce development and training programs.
The construction of new manufacturing plants not only directly creates jobs but also indirectly fosters a more skilled and diverse labor market, contributing to economic growth and innovation.
This boom in employment opportunities comes against the backdrop of a strong American job market. Manufacturing employment is currently just below 13 million, a level not seen in 15 years. Unemployment is as low as 1% in high-growth manufacturing segments like machinery and computer and electronics manufacturing.
The boom in factory construction propels the software market.
Demand for Manufacturing Execution Systems (MES), Enterprise Resource Planning (ERP) software, and Supply Chain Management (SCM) solutions is healthy. These systems are crucial for optimizing production processes, managing resources efficiently, and ensuring seamless logistic operations from the ground up.
But More MES, more ERP, and more SCM won't be enough to address the growing needs of American manufacturing. IoT and AI in factory operations are a requirement to meet the quality needs of these new factories and help them run efficiently in a strained labor and supply environment.
The manufacturing renaissance also underscores the importance of workforce management software, aimed at training and upskilling employees to handle new technologies and processes.
As the manufacturing landscape evolves, the roles of skilled labor and digital technology become increasingly central. The construction of new manufacturing sites sets the stage for this transformation. But it's the integration of advanced machinery, skills, and software that will ensure their success.
