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The IRA has sparked a factory-building boom

Aug 16, 2023
Illustration of a roll of green sheet steel resembling a roll of cash hanging from a crane

Illustration: Annelise Capossela/Axios

There's one area where the Inflation Reduction Act has already unleashed a wave of investment: new factory construction.

Why it matters: Private investment to build new factories in the U.S. is up 55% from last year — mostly driven by legislation, per a Moody's report yesterday.

What's happening: The IRA and two other bills have stoked a surge in manufacturing investment, especially for EVs, computers, electronics and semiconductors.

Catch up fast: Those other bills are the Infrastructure Investment and Jobs Act, also known as the bipartisan infrastructure law, and the CHIPS and Science Act, aimed at bolstering computer chip manufacturing.

Of note: Factories take years to plan. Many of these investments were already in the works.

  • Russia's invasion of Ukraine also spurred companies to reshape their supply chains.

Yes, but: "Our analysis of trends in the utilities, auto and oil and gas sectors suggest that the IRA is already factoring into companies' investment decisions," Moody's writes.

What's next: Further manufacturing spending in 2024 and 2025, especially as federal agencies finally implement IRA incentive programs.

  • "Many companies have likely been in a holding pattern this year, awaiting clarity from various federal agencies to issue detailed implementing rules before committing to large investments," the report notes.
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