Home / The Manufacturing Sector is Cautiously Optimistic Heading into Spring

The Manufacturing Sector is Cautiously Optimistic Heading into Spring

Electric vehicle related and advanced energy expansion project announcements, among others, hint at an economic surge.

Posted: February 12, 2023

Rendering for two Intel Corp. processor factories in Licking County, Ohio. These factories will create a new epicenter for advanced chipmaking in the United States. The $20 billion investment will span nearly 1,000 acres. Image courtesy of Intel Corp.

Ford Motor Co.’s $5.6 billion mega campus is underway in Stanton, Tenn. Ford will reimagine how vehicles and batteries are manufactured. Concept design; final design subject to change. Image courtesy of Ford Motor Co.

This year, Caterpillar Inc. plans to invest $1.5 billion in its machinery, energy and transportation divisions. Pictured is the 962 medium-wheel loader. The wheel loaders feature simple-to-use technologies to help boost operator efficiency and increase productivity. Photo courtesy of Caterpillar Inc.

This year, Caterpillar Inc. plans to invest $1.5 billion in its machinery, energy and transportation divisions. Pictured is the 962 medium-wheel loader. The wheel loaders feature simple-to-use technologies to help boost operator efficiency and increase productivity. Photo courtesy of Caterpillar Inc.

When the Institute for Supply Management’s (ISM) January Manufacturing PMI came in at 47.4%, 1 percentage point lower than December’s 48.4%, it indicated a second month of contraction — the lowest since May 2020 when the number was 43.5% — the overall consensus was that the manufacturing economy is lousy.

The numbers are likely not far from the floor and can change course, especially heading into spring months that are traditionally strong for manufacturing, said Timothy R. Fiore, CPSM, C.P.M., Chair of the ISM’s Manufacturing Business Survey Committee.

Corporations continue to make major capital investments in manufacturing facilities for the future, responding to the economic climate with a resounding: what recession? According to ISM, the panelists from its Business Survey Committee reported new order rates were diminishing; however, manufacturers are poised for growth in the second half of the year.

One need only look at the billions of dollars in economic development announcements in recent months from the automotive (electric vehicles and batteries), advanced energy (solar), machinery (construction) and semiconductor industries, for example, to understand what the future could hold. A common theme is emerging regarding the major expenditures being poured into the electric vehicle related and advanced energy and energy storage markets.

And the metalworking industry is poised to manufacture the innovative products these companies need, thanks to continued implementation and utilization of robotics and automation systems, Industry 4.0 technologies, and collaborating with suppliers to overcome problems in their process to create efficiencies and increased production. The metalworking industry is also exploring industry diversification, learning how they can best provide products to the electric vehicle and battery markets as well as the advanced energy market, among other emerging sectors.

Manufacturers Still Spending Big

Ford Motor Co.’s $5.6 billion mega campus is underway in Stanton, Tenn. Ford will reimagine how vehicles and batteries are manufactured. Concept design; final design subject to change. Image courtesy of Ford Motor Co.

With the massive capital outlays on tap for the coming years, and the embrace by the metalworking industry of machinery and equipment that provide greater efficiencies and time savings, shops will find opportunities in any number of sectors.

Caterpillar Inc. has announced it will invest $1.5 billion in capital expenditures in 2023 for its machinery, energy and transportation divisions. In January, Caterpillar announced it will invest in Lithos Energy, Inc., a U.S.-based battery technology company that produces lithium-ion battery packs.

In other site selection and expansion projects, Intel announced in January it will invest $20 billion in two semiconductor factories in Licking County, Ohio. Back in November, First Solar Inc. announced a $1 billion investment in Lawrence County, Ala., to manufacture solar panel modules. In September, The Ford Motor Co. broke ground in Stanton, Tenn., for the $5.6 billion BlueOval City mega campus. Ford will manufacture electric batteries for future Ford and Lincoln electric vehicles.

And, in the summer of 2022, Panasonic Energy Co. announced it will build a $4 billion battery cell factory in DeSoto, Kan. In Liberty, N.C., Toyota Motor Corp. will invest $3.8 billion in a battery plant. Panasonic’s Prime Planet Energy & Solutions division will be a partner at the plant.

The opportunities are there for the taking. Despite economic uncertainties, the manufacturing industry will overcome the first half of this year’s slowdown, and can expect a stronger second half with business conditions that will most likely be similar to 2022, according to ISM.

www.ismworld.org

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