Since the signing of the CHIPS Act in summer 2022, construction in support of manufacturing has been hopping. Here’s the latest on the growth spurt and tips for getting in on the action too.
Exponential Growth
According to Stephen Sandherr of the Associated General Contractors of America (AGC), the manufacturing construction boom, spurred by the onshoring movement born during the pandemic, has been“really helping construction….” The action for builders in manufacturing shows no signs of slowing down, as Sebastian Obando and Julia Himmel report in Construction Dive:
Spending in the manufacturing sector has ballooned since the CHIPS Act was signed into law last August. Projects underway include everything from plants focused on chip fabrication and EV batteries to consumer goods and cars….Through June, manufacturing construction spending increased nearly 80% in 12 months, according to an Associated Builders and Contractors analysis. On a seasonally adjusted annual rate, spending in the sector hit approximately $195.9 billion during that 12-month span. That exponential growth isn’t expected to hit any speed bumps either, according to Richard Branch, chief economist at Dodge Construction Network.”Public dollars are flooding into the manufacturing and infrastructure sectors,” said Branch. “[That’s] leading to significant growth over the last year.”
Commitment of public funds for manufacturing has been amplified by a major effort from the private sector: “The renewed push to revive American manufacturing after decades of offshoring has led to over $503 billion in private company investment as of June 2023….The multibillion-dollar investments scattered across the country range from biotechnology facilities and chip fabrication plants to electric vehicle battery factories and clean energy projects.” Among the major projects that have broken ground in the past year are: a $25 billion Samsung chip fabrication plant in Taylor, Texas; and, a $20 billion Intel semiconductor chips plant in Licking County, Ohio. Over $1 billion more manufacturing projects are in the pipeline for the months ahead. Contractors looking to get in on the action can learn more about some of the current federally funded building initiatives here and about the CHIPS Act in particular here. Start your growth spurt with The Partnership Account® for Contractors. Once qualified, contractors get:
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Good To Know: CHIPS Act?
A lot happens in a year, so if you need a refresh on the CHIPS Act, who could blame you? The full name of the CHIPS Act is: Creating Helpful Incentives to Produce Semiconductors (CHIPS) and Science Act . In addition to directly benefiting semiconductor chip manufacturers and suppliers, “CHIPS is also expected to have a secondary halo effect in the broader ecosystem through migration of supply chains to the US.” Constructive Dive shares this handy overview of the legislation:
The CHIPS Act provides $52.7 billion for American semiconductor research, development, manufacturing and workforce development. This consists of $39 billion in manufacturing incentives, including $2 billion for the legacy chips used in automobiles and defense systems, $13.2 billion in research and development and workforce development and $500 million to strengthen global supply chains….The CHIPS Act also provides a 25% investment tax credit for capital expenses for manufacturing of semiconductors and related equipment.
As you steer your business into the future, don’t forget: Colonial Surety is here to help contractors build the capacity to compete more–and win more. In fact, across the country, contractors are expanding their capabilities via The Partnership Account®. Receive free insights and financial scores just for completing our efficient pre-qualification. Once qualified, leverage The Partnership Account® for a surety line of credit—in writing—and a private digital dashboard. Use it to access real time financial intel, including a day to day snapshot of single and aggregate limits and current and available bond capacity. Go ahead: update work on hand, increase your aggregate and achieve lift-off on that next project.
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