The Eyepopping Factory Construction Boom in the US. (wolfstreet.com)

[usonian]

The Eyepopping Factory Construction Boom in the US
by Wolf Richter • Dec 2, 2023

https://wolfstreet.com/2023/12/02/the-eyepopping-factory-construction-boom-in-the-us/

In October, $18.5 billion were plowed into construction of manufacturing plants in the US ($246 billion annualized), up by 73% from a year ago, by 136% from two years ago, and by 166% from October 2019. The relentless pace of the month-to-month increases is what’s amazing – from $12.5 billion spent in January to $18.5 billion in October.

The construction boom started in early to mid-2021, and since then, spending has tripled. About a year later, in July 2022, Congress passed a package of subsidies for select manufacturing industries to build factories, such as semiconductor makers (they’ll get $52 billion) and EV battery makers.

But the wheels of government turn slowly, approvals take their time, disbursements of funds for large projects takes time, so the flow of these government funds would just be the first trickle in 2023. The bulk is still coming.

For the calendar year 2023, spending on factory construction will likely get close to $200 billion. For the first 10 months, the ever-larger monthly amounts already reached $159 billion. If November and December are only flat with October, spending will reach $196 billion by year-end.

More at the link.

Some comments on Hacker News:

• People are finally realizing sending all your manufacturing to countries that hate your guts is a horrible idea? There may be hope for us yet!

• Only took 40 years….

•Right, inflation reduction act and China decoupling in general. Tangentially, Mexico is now the US' top trading partner, with China in 3rd place.

• What we should have done 40 years ago. Bootstrapping Mexico/LA over Asia fixes a lot of problems

[dutch777]

1. I wonder how much of this is speculative vs. actual companies building plants for their operations?

Our area in eastern PA has seen a number of speculative warehouse builds that sit now "For Lease" with no takers. Amazon has decreased number of warehouse operations and others have consolidated. There are older plants here that are 1/2 or more empty with space for lease that also does not seem of interest to anyone. I totally support reshoring manufacturing operations and returning good paying jobs to our local economies but I also know developers and equity finance operations also get all competitive and race to market with new builds with half of them getting stuck with no takers for what they built. And the banks that financed them get stuck in the end and with commercial office space already a problem for regional banks I hope this isn't another bad investment for them.

[usonian]

2. One comment I read suggested that new plants may be far more preferable than old ones.

Softail Rider
Dec 2, 2023 at 4:26 pm
Steel mill in Granite City, IL closing down over a thousand jobs won’t help the Metro East economy.

Wolf Richter
Dec 2, 2023 at 8:11 pm
Softail Rider, A lot of old steel mills are very inefficient.
When they cost too much to operate, and cost too much to upgrade, it’s lights out.
So I checked.
This is an ancient steel mill. The company already shut down a blast furnace last year, and now is shutting down the second blast furnace. So it won’t make any more crude steel.
But the thing is the steel rolling and finishing operations at the site will continue, using crude steel from other facilities.
So it’s not a demand issue. It will still roll the steel there for its customers, but just won’t produce crude steel there and instead get the slabs more cheaply from another place. No company can afford to operate old inefficient factories. They have to go and make room for modern efficient factories.

[dutch777]

5. New certainly makes sense when talking equip't. I know too some sites here have asbestos & other chemical contamination

that no one wants to end up owning. Really depends what you are manufacturing.

[bucolic_frolic]

3. I wonder what we're manufacturing? guns and ammo?

Every Republican with a 50 million line of credit buys virgin farmland and plants an industrial park. I also read flex-manufacturing space is in demand. Rent a former retail site with 10 other tenants.

[usonian]

4. Looks like it's manufacturing that was farmed out mostly to China.

I don’t think we outsourced weapons manufacture there.
I don’t have any data deeper than the article, but it’s hopefully based on real data. … Wolf had better know better than I do.