Manufacturing employment supports a vast spectrum of multifamily renters across the country, and the sector represents over 11 million total jobs nationwide despite recent losses as a result of the COVID-19 pandemic. In this month’s Employment Sector Snapshot, we will be taking a closer look at the multifamily markets that are best positioned to take advantage of future job growth in the manufacturing sector.
Multiple indicators suggest that the industry could witness a widespread “reshoring” of manufacturing jobs to the U.S. as the global pandemic exacerbates weaknesses in global supply chains. Keeping a close eye on the state of manufacturing during (and after) the COVID-19 pandemic is a prudent strategy for any multifamily investor.
Reshoring Gains Momentum (and Could Stick)
According to a survey performed by Thomasnet, 64% of manufacturers report they are leaning toward bringing their operations back to American soil. This is a massive jump from 10% of manufactures who responded to a similar survey in March.
While COVID-19 has served as a catalyst for a surge of interest in reshoring, the reality is that multiple factors had already begun encouraging companies to consider relocating their manufacturing stateside. International trade disruption and a rising interest in automation suggests that manufacturing jobs will not be relocated overseas after the pandemic.
Which Manufacturers Will Begin Reshoring First?
Due to concern over lack of resources to treat COVID-19 and stop the spread of the disease, health care and other “essential” manufacturers are likely to be at the forefront of reshoring efforts. A recent analysis published by Industry Week predicted that several manufacturers beyond the health care industry will seriously reconsider their dependence on global supply chains in the coming months.
This trend could drive an uptick in manufacturing jobs and support demand for new or existing multifamily development in some of the nation’s rental hotspots. Manufacturers of these products are among the most likely to initiate plans to bring their manufacturing home:
- Medical devices
- PPE (personal protective equipment)
- Sanitation gear
- Laboratory and testing supplies
- Computer hardware
- Smartphone development
- Rare-earth materials
- Heavy industries
Manufacturing Markets Poised for Reshoring Growth
Markets in the southeast and southwest stand to benefit the most when it comes to “reshoring” jobs back to America. They offer business-friendly local governments, low income taxes, and reasonable housing prices.
Recent job announcements in these markets point toward a new era for American manufacturing and one that could bolster apartment demand into the short and long term. The following are a few examples of surging manufacturing markets to monitor during and beyond COVID-19:
- Phoenix – The Taiwan Semiconductor Manufacturing Company announced that it will be building a new advanced semiconductor factory that will add 1,600 jobs to the local economy. Honeywell will likewise be expanding its local operations with 500 new employees to ramp up production of N95 protective masks. Other big-name manufacturers operating in the metro include Intel, General Dynamics Missions Systems, and Boeing.
- Orlando –Aeronautics firm Aerion Supersonic recently selected the Orlando metro as the home of its newest project, the AS2 jet. The company will be relocating its headquarters from Reno, Nevada to Aeon Park, a new development that will be built up along 60 acres adjacent to the Orlando International Airport. The company’s $300 million investment is expected to generate over 675 jobs to the metro with an average salary of over $105,000. Other firms supporting manufacturing jobs in the area include Lockheed Martin and Siemens Energy.
- Fort Worth – In a recent win for the Dallas-Forth Worth metro, tools manufacturer Stanley Black & Decker recently announced that it will bring 500 new jobs to the area by the end of 2020. These jobs will be reshored from the company’s production facilities in China to a 425,000-square-foot facility located in the AllianceTexas corridor. Fort Worth also boasts more room for expansion than its fellow Texas metros, with over 70,000 acres ready to be developed.
“Dallas-Fort Worth’s diverse employment, pro-business environment and overall cost of living are major drivers for local corporate relocations,” added Managing Director Jay Gunn. “Being located in the center of the country with ideal transportation options will certainly influence future decisions as reshoring becomes more focused.”
Want to know more about how key job sectors and the economy at large are responding to COVID-19? Visit Berkadia blog each week for coverage of the big stories impacting employment and the multifamily industry.