Government
US Treasury Analysis Highlights 'Surge' in Manufacturing Construction
Photo courtesy of Intel Corp.
When President Joe Biden spoke at the groundbreaking last September for Intel Corp.’s $20-billion semiconductor chip plant facility in New Albany, Ohio, he touted the project as one of many that would help transform the Rust Belt into a “Silicon Heartland,” thanks in part to funding provided by the CHIPS and Science Act he had recently signed into law.
“The future of the chip industry is going to be made in America,” Biden said.
Participants in the two-plant project include Gilbane Building Co.—leading early excavation work—and Bechtel as general contractor on Phase 1 of plant design and construction.
Intel says the work is supporting 7,000 construction jobs. The tech company is also set to benefit from a package of incentives and tax breaks worth about $2 billion, according to Ohio’s Dept. of Development.
The Intel project is part of what the U.S. Treasury Dept. calls “a striking surge” in manufacturing construction. In an analysis that the department released June 27, officials say real manufacturing construction spending has doubled since the end of 2021 as a result of supportive legislation like the CHIPS Act, as well as the Infrastructure Investment and Jobs Act and the Inflation Reduction Act.
U.S. Census Bureau data show the value of construction put in place totaled $7.4 billion in December 2021 and rose nearly every month since then to an estimated $15.3 billion in April. Manufacturing construction starts increased 185% last year, according to the Dodge Construction Network.
Technology manufacturing in particular has driven the boom, according to the Treasury Dept. analysis. Construction spending for computer, electronics and electrical manufacturing has nearly quadrupled since the start of last year, even after accounting for material and labor cost increases by deflating spending using the Producer Price Index.
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Construction for other manufacturing segments has remained mostly consistent with their respective long-term levels.
The CHIPS Act and other legislation have included a focus on technology manufacturing, providing billions of dollars to incentivize the production of items such as electric vehicle batteries, solar energy equipment and semiconductor chips, as in the Intel project.
According to the Semiconductor Industry Association, more than 50 new semiconductor manufacturing-related projects have been announced in the U.S. since lawmakers introduced the CHIPS Act in 2020.
“The macroeconomic situation, policy implementation, and a range of other conditions will continue to shape construction manufacturing spending in the months and years to come,” the Treasury Dept. analysts wrote. “While today’s striking trend may cool, the CHIPS Act has fostered an ongoing opportunity for investment in this sector.”
The Treasury report's release comes as Biden is preparing for the 2024 presidential election. The White House has been pushing the highlights of “Bidenomics” aimed at growing the middle class with public investments.
But Biden is facing pushback from some Republicans over who deserves credit for the economic successes.
The Associated Press reported that Georgia Gov. Brian Kemp (R), speaking June 27 at the groundbreaking of Anovion Technologies' battery plant project in Bainbridge, Ga., said the growth of EV-related manufacturing in the state was a result of Georgia being friendly to companies, rather than the federal government putting its “thumb on the scale, favoring a few companies.”
Anovion is receiving $117 million for the $800 million project via the Inflation Reduction Act.
In the meantime, work is advancing on projects like Intel’s Ohio facility. In May, the company said crews had started placing concrete for the foundation. The plant is scheduled to open in 2025.
