Auto Plant Projects Continue to Fuel New Industrial Construction Market in 2023

Industrial mega-projects once again were the stars of the construction scene, with eight projects valued at $1 billion or more either breaking ground or entering the design phase during the first six months of 2023, according to Electrical Marketing research.

A $5.3 billion LNG plant in Port Arthur, TX, that broke ground in May topped the list, followed by a $3.5- billion Honda EV battery plant in Jeffersonville, OH. A recent report from the U.S. Treasury Dept. said the financial incentives from the Biden Administration has contributed to a a “striking surge” in construction spending for manufacturing facilities.

“Today, the computer/electronic segment is the dominant component of U.S. manufacturing construction,” the report said. Importantly, the boom in this segment has not been offset by reduced spending on other manufacturing construction segments, which are largely consistent with long-term levels. In fact, construction for chemical, transportation and food/beverage manufacturing is also up from 2022, albeit much less than the computer/electronic sector.

“This rise in the spending began in the months before the CHIPS Act passed, as many factors beyond policy contribute to construction spending. Still, the legislation has played a critical part in continuing and expanding this trend.”

The report also noted that according to the Semiconductor Industry Association, more than 50 new semiconductor ecosystem projects have been announced in the wake of the CHIPS Act, and also cited a Deutsch Bank report that said 18 new chipmaking facilities will have started construction between 2021 and 2023.

When you look at EM’s list of large projects (see chart at the bottom of this post) and at the latest U.S. Census data on construction spending, you see a steady resurgence in the construction of hospitals and other medical facilities.

The $2.5-billion Henry Ford hospital expansion project in Detroit MI, now approaching the design phase was one of four hospitals in the 50 largest construction projects that Electrical Marketing’s editors found over the past few months. The other large hospital projects on the list included the $440-million Rady Children’s Hospital ICE/EMS Pavilion in San Diego; the $232-million University of Missouri Children’s Hospital in Columbia, MO; and the UTHealth Houston School of Public Health in Houston.

Another job that caught the eye of Electrical Marketing’s editors is the colossal $1-billion, 2,400-bed student residential village and student center now being built on the campus of the University of California-San Diego’s campus in La Jolla, CA.

Although higher rates for commercial construction loans, the move to remote offices and the dearth of single-family building construction are putting a damper on the office and single-family home sectors of the construction market, the health of the industrial construction market should continue pumping dollars into the overall construction industry.