HPM’s Chris Allee Shares Insights on Advanced Manufacturing
The article below was written by Richard Berger and published by GlobeSt.com. To learn more, click here.
Top growth markets Phoenix, Atlanta, Austin, and Raleigh are considered North America’s top four advanced manufacturing sectors, according to a new report from Newmark.
The firm said that rapid expansion in North America’s advanced manufacturing sector promises to deliver significant economic impact to newly selected sites and their surrounding regions through added jobs, infrastructure improvements, and substantial capital investments.
The report said regions predominantly secondary and tertiary metros near major markets with higher-than-average levels of preexisting advanced manufacturing talent, relatively lower-cost energy, and abundant, affordable land are poised to benefit most from advanced manufacturing investments.
Travis Epp, Partner, Audit & Assurance, EisnerAmper LLP, Partner, Eisner Advisory Group LLC, tells GlobeSt.com that the momentum for advanced manufacturing is strong because of supply chain challenges identified in recent years as well as geopolitical concerns.
He said the federal government has provided incentives to stimulate advanced manufacturing by creating initiatives such as the CHIPS Act, the National Biotechnology and Biomanufacturing Initiative, the Inflation Reduction Act (IRA), and the Infrastructure Investment and Jobs Act (IIJA), which itself provides a host of incentives for manufacturing clean energy technology.
“The economic viability of the advanced manufacturing sector is significantly impacted by both tax incentives (federal, state, and local) and qualified labor,” Epp said.
“In recent years, there has been a shortage of labor in the manufacturing industry despite significant wage increases to offset inflation. To meet the labor demands of both advanced manufacturing and traditional manufacturing, access to labor is essential, which requires proximity to metros near major markets.
“Further, skyrocketing land prices in metro markets adversely impact the attractiveness of developing manufacturing facilities in major markets.”
Research and development is also a key aspect of advanced manufacturing as more technology is involved in the process, according to Epp.
“Unlike the previously noted incentives, the taxation of research and development continues to be adversely impacted since the beginning of 2022 due to the elimination of the historical treatment of full expensing and the requirement for amortization,” he said. “Businesses continue to lobby for the return to expensing.”
His clients, which include both domestic companies and US subsidiaries of foreign parents, have utilized the tax incentives available to them and are in secondary and tertiary metros near major markets.
Chris Allee, Director of Program Development at program management firm HPM, tells GlobeSt.com that manufacturers and investors are targeting markets that can tick the many boxes needed to be successful amongst today’s headwinds, including low labor costs but accessibility to a wide pool of talent, a business-friendly atmosphere, and high population growth.
“We’re seeing hot spots emerge across the Sunbelt in states like Tennessee, Texas, North Carolina, and Georgia,” Allee said. “Especially in Texas, we’re seeing more suburban submarkets around major metro hubs like Austin and Dallas provide these infill locations that manufacturers find attractive and can offer the dynamic labor and strong fundamentals needed to be successful.”
Newmark said Phoenix has attracted 14 major project announcements—the most of any single market examined—that are expected to generate close to 15,500 additional advanced manufacturing jobs for the metropolitan area.
It pointed to mid-sized markets such as Syracuse; Albany; Greensboro; and Columbia, SC; as others that offer greater cost savings for manufacturing operators while still maintaining the skilled workforce needed.
New clusters are forming and existing clusters are further maturing as a record number of new industrial projects are set to begin in over 160 metro and micropolitan areas in the next decade, as captured in Newmark Research’s survey.
