Industrial Outlook in Perspective: Could Manufacturing Investment Improve Under Trump?
With the inauguration of President Donald Trump, Industrial Manufacturing in the U.S. seems to be set to change sooner rather than later. On Monday morning, Trump met with leaders in U.S. manufacturing, including Tesla Motors Incorporated (Palo Alto, California) (NASDAQ:TSLA) CEO Elon Musk, Under Armour Incorporated (NYSE:UAA) (Baltimore, Maryland) CEO Kevin Plank, and Ford Motor Company (NYSE:F) (Dearborn, Michigan) CEO Mark Fields, to name only a few. In the meeting, Trump told the corporate leaders that they could expect decreased regulations and lower corporate tax rates. Trump also vowed to institute penalties on U.S. companies who choose to manufacture products outside of the U.S. by "imposing a very major border tax on the product when it comes in," according to Reuters.
The meeting occurred as Trump was poised to sign his first executive order, which calls for U.S. withdrawal from the Trans Pacific Partnership (TPP), the massive free trade agreement involving the U.S. and 11 Pacific Rim nations. For more on the TPP, see October 28, 2016, article - Breaking Down the Trans Pacific Partnership.
The TPP has not been ratified by Congress, and the executive order will have little immediate effect on the U.S., but the message is clear: Trump wants manufacturing jobs to remain in the U.S., rather than risk the possibility of their being sent abroad, as opponents of the TPP say will occur if the agreement is enforced. However, not all manufacturers will be supportive of withdrawing from the TPP. The National Association of Manufacturers (Washington, D.C.) has called for implementation of the TPP, claiming that it would provide a more level playing field for the export of the U.S.-manufactured goods, which can be subject to high tariffs in other countries.
With or without the TPP, the North American Free Trade Agreement (NAFTA) or other trade agreements in effect, the U.S. is poised to see a good year in manufacturing, according to Industrial Info's 2017 Global Industrial Outlook.
In 2016, Industrial Info tracked 2,297 capital and maintenance projects worth an estimated $89 billion that kicked off in North America. The spending is likely to continue into 2017. While certain sectors are likely to see a decline in spending, low oil and natural gas prices (which are expected to remain around current prices in 2017) have helped drive spending increases in North America. Provided these oil and natural gas prices remain stable, foreign companies will continue to invest in the U.S., and domestic companies will continue to expand to take advantage of the situation.
Sales in the automotive sector have begun to show slight signs of slowing after several years of highs. This will lead to slower production and a modest reduction in overall spending through 2017. For more on the effects of the new administration on the automotive sector, see November 18, 2016, article - Concerns about Trump Administration Drive Uncertainty in U.S. Auto Industry.
While sales have begun to slow in North America, the full effects of this slowdown will probably not be felt until 2018, and spending should remain healthy through 2017. Future investment in the plastics and rubber sector will depend on how the automotive sector fares, with 70% of the volume and 50% of the weight of a vehicle coming from plastic and rubber parts.
Investment in the transportation sector, which includes rail, ports and airports is expected to remain steady throughout 2017, with the bulk of major investment coming from the rail sector--both commuter and freight rail.
The warehousing and distribution sector, which also falls under the auspices of Industrial Manufacturing, continues to show strength, as consumers turn more and more to online purchasing, necessitating the increased infrastructure to support shipping and timely delivery of products.
These are just a few sectors under Industrial Info's coverage of the Industrial Manufacturing Industry. To learn more about to what to expect in the Industrial Manufacturing Industry, as well as 11 other industries tracked by Industrial Info, check out our 2017 Global Industrial Outlook. Write-ups from our industry experts provide information on both North American and international sectors, as well as top-line economic forecasts for different world regions. Quarterly updated project spending statistics are broken down by industry, market region and budget type (capital or maintenance). Detailed assessments from Industrial Info's industry experts help explain how the data and information reflect broader industrial trends.
Subscribe to this product today to gain a better understanding of what to expect in 2017 and beyond!
For more information, please visit www.iirenergy.com and subscribe to the IIR blog for more updates.