CONSTRUCTION GROWTH

Most industries gauge growth by their Purchasing Managers Index (PMI) score. The PMI is an index of the prevailing direction of trends that purchasing managers are experiencing in terms of new orders, employment, production, supply, and inventories and a score of 50 or above indicates growth. The U.S. manufacturing sector has experienced this growth for the past 28 months. Construction spending to build, expand, or renovate in manufacturing hit an all-time single month high of $97B nationwide in June of this year.¹ However, the most staggering statistic is this one: dollars spent on construction of new manufacturing facilities in the U.S. has soared 116% over the past year, dwarfing the 10% gain on all building projects combined, according to Dodge Construction Network.

RESHORING

While reshoring is generally defined as moving your operations back to U.S. soil, it also can mean adding and changing to suppliers located in the U.S., which a record number of companies are doing, contributing to the growth discussed earlier. In a March 2021 survey performed by Thomas, an industrial-focused research company, 83% of manufacturers said they are “likely” to “extremely likely” to reshore. This number was 54% in March of 2020. These companies cited Total Cost of Ownership (TCO) as the top factor when considering reshoring their supply chain.² In this sector, TCO refers to all costs related to acquisition, transportation, and storage of the products within the supply chain. Recent history is riddled with offshore delays which have left overseas savings unrealized. Even with U.S. TCO coming into balance, price is still the main deterrent to reshoring, but improved turnaround times and material availability are making it a more attractive option to manufacturers as they try to “future-proof” their supply chains.

BATTERIES

California made history in August when regulators agreed to ban the sale of new gasoline-fueled cars by 2035. Because the state is the largest auto market in the country, the measure could lead to a major shift across the country. California had to go first according to federal law, and now states can piggyback on to the California rule, which Governor Baker of Massachusetts has pledged to do. Washington state will follow California and prohibit the sale of new gas-powered vehicles by 2035. Along with electric vehicles are the batteries to power those vehicles. With the passage of the Build Back Better incentives in July, the demand has been pushed even higher, as tax credits offered in the incentives require that both the car and battery be manufactured in the United States. The pace of this investment is accelerating – just in 2022, companies have announced $13 billion in domestic electric vehicle (EV) manufacturing – more than triple the investment in 2020. Companies have also announced $24B in batteries – more than 28 times the investment in 2020 – and over $700M to support EV charging³

MEETING THE DEMAND

Clearly, the demand for these facilities is great, but the sheer size of the facilities is also contributing to two more trends. First, the projects are huge in square footage and budget and are termed “mega projects” within the construction industry. The acquisition of the land and name of the company looking to build is often confidential and the speed to market is incredibly rapid. In some cases, we are hired and need to be moving dirt in mere weeks, despite just finding out the name of the client and type of facility being planned.

Second, in order to manage and staff projects of this size at such a rapid pace, we are delivering most projects in a collaborative fashion. It’s not only desired, but NECESSARY. Efficiencies such as phasing construction to keep production lines open, prefabrication, and locating the design and construction teams together on site so we can build as fast as they design are all being employed.

On one project currently under construction, JE Dunn led an intensive six-month early engagement process, engaging all engineering and design disciplines to optimize coordination between building design and process decisions. A high level of trust quickly developed amongst stakeholders, leading to the ability to quickly overcome challenges. As a result, the program has been optimized. The team was able to reduce building footprint by 200,000 SF without sacrificing program. This can be attributed to a culture of challenge, where the team freely analyzes budget, scope, permitting, and other typical challenges. With everything out in the open, the best decision for the project is made. Design-build and other collaborative delivery methods make large scale projects much more feasible in light of these challenges.

EMPLOYEE EXPERIENCE

It’s fair to say that every market is fighting for talent and labor. The industrial sector is no different. In addition to growth, they have a skilled workforce close to retirement age with the next generation of trained labor ready to roll in below them. A large portion of our manufacturing was outsourced to Asia 30 years ago and the shortage caused by this generation’s retirement has been building since. Employers are looking for ways to make all employees feel valued and respected by reducing the division between office and plant employees and offering more daylight and outdoor space traditionally lacking within manufacturing. For more information on the industrial sector is upping their game to compete for talent, follow the link below for an article written by JE Dunn’s Design Phase Services Principal Architect, Tammi Bailey.