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Economist explains the implications of Mountain West's national lead in manufacturing construction

 The Tesla Gigafactory 1 in December 2019.
Wikimedia Commons
The Tesla Gigafactory 1 in December 2019.

New data shows the Mountain West is leading the nation in the value of construction for manufacturing plants – an indicator of the significant economic changes afoot across the region.

The U.S. Census Bureau released manufacturing construction numbers last week that break down monthly private spending by region. Its tables show that the Mountain West saw $26.5 billion worth of manufacturing construction in 2022, beating out every other region in the United States. Just in the last year and a half, it’s increased five-fold, according to an analysis by the Economic Innovation Group.

“There's a lot of momentum behind the buildout that's happening now,” said Kenan Fikri, a research director at EIG. “It suggests that this manufacturing job growth in the region could even accelerate in the years ahead as these plants come online.”

The West South Central region – the heartland of heavy manufacturing of oil and gas in states like Texas and Louisiana – ranked second with $25.7 billion worth.

Back in 2017, the Mountain West region had a private manufacturing construction value of only $4.2 billion.

“That's almost a six times increase in the amount of money that we're talking about here,” Fikri said, “and it's far greater than any other region in the country is experiencing so far.”

Main contributors to the growth include new technologies taking the stage. Intel’s two new semiconductor plants under construction in Arizona amount to a $20 billion investment. Tesla is putting $3.6 billion into expanding its gigafactory in Nevada as the electric vehicle market booms. The rise in artificial intelligence and 5G technology has Micron investing $15 billion in a new microchip manufacturing plant in Idaho.

“We also now see such a federal push in clean energy subsidies and development,” Fikri said. “All these things kind of came together around this new American industrial policy in a way that started to really move the dial and change industry investment decisions rapidly over the past couple of years.”

With all these locations near Silicon Valley and the shipping on the West Coast, the region's a favorable spot for companies to expand.

Employment-wise, from 2017 to 2022, manufacturing jobs in the Mountain West jumped by almost 18%, according to federal data crunched by EIG. That is more than twice the rate of the West South Central region, though Fikri said the Mountain West still accounts for just 5% of all manufacturing employment.

Fikri said there are other big implications to this growth.

“[Facilities] will be adding to the demand for workers locally, so that could drive further population growth,” he said. “It could also drive further inflation and cost increases.”

He also shared how these manufacturing companies are “thirsty” when it comes to water usage, which promises to further strain the region as it grapples with historic drought.

While Fikri believes rural areas will see some investment, he said the benefits will largely flow to metropolitan areas.

“I look at this data and I see the future of U.S. manufacturing being much more Scottsdale than Scranton,” he said. “That economic activity is going to be attracted to locations that are already experiencing population growth – locations that are relatively low-cost to start and set up a business, locations that have a youthful workforce and a diverse employment base and locations that have an innovation ecosystem in place with dynamic people and companies trying to forge a new American economy.”

It all amounts to the Mountain West having a strategic advantage, Kikri said, due to its mix of technology, innovation and natural resources.

“That's going to make it an attractive place to also do some more advanced high-value manufacturing off of what's dug out of the ground,” he said. “And it makes sense that as activity, especially in the technology industry, is reshored from Asia, it's going to find a location pretty close to home on the West Coast in the United States.”

This story was produced by the Mountain West News Bureau, a collaboration between Wyoming Public Media, Nevada Public Radio, Boise State Public Radio in Idaho, KUNR in Nevada, the O'Connor Center for the Rocky Mountain West in Montana, KUNC in Colorado, KUNM in New Mexico, with support from affiliate stations across the region. Funding for the Mountain West News Bureau is provided in part by the Corporation for Public Broadcasting.

Copyright 2023 KUNC. To see more, visit KUNC.

Emma VandenEinde
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