US & Global Economic Impact Analysis and Forecasts

Freedonia analysts and economists are sharing their insights on how major events are impacting different parts of the US and global economies.

Continuing Demand for Warehouse Space to Spur Construction Activity

According to a recent article, demand for warehouse space remains strong, spurred by:

  • continuing consumer interest in e-commerce, which has caused substantial increases in the number of packages mailed across the US
  • high levels of building construction activity, boosting shipments of bulky building materials, such as lumber, roofing, and siding
  • supply chain difficulties that have led to products spending more time in warehouses before they are sent to their final destination

This need for warehouse and distribution will support the construction of new storage facilities, driving demand for such materials as:

  • prefabricated metal buildings and components, such as insulated wall panels
  • prefabricated metal and wood roof and floor trusses
  • concrete for building foundations, floors, and ramps and loading docks
  • large overhead metal doors
  • insulation (for those structures holding refrigerated and frozen items)
  • wood and metal grating flooring (for multi-story storage facilities)
  • wiring, lighting fixtures, and electrical components

Furthermore, as more warehouses and storage facilities are erected, other products will be needed to outfit these buildings, including:

  • pallets
  • metal racking and supports
  • conveyor belts and other package retrieval system components
  • materials handling equipment, such as forklifts

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research, particularly in the Construction and Building Products. Freedonia also offers an expanding catalog of COVID-19 Economic Impact reports, which highlight how various industries are responding to the current crisis with a comparison to recent recessions. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Chemicals      Construction & Building Products      Covid-19      Metals      Minerals & Glass      Plastics & Other Polymers    

Biden Administration to Investigate Global Supply Chain Issues

On February 24, US President Joe Biden signed an executive order mandating that federal agencies conduct a 100-day review of critically important supply chains, as the COVID-19 pandemic has raised focus on issues regarding access to certain products and materials generally sourced from abroad (and particularly those from China).  The review will focus specifically on four items, some of which have faced supply chain problems even before the pandemic:

  • Semiconductors:  Access to these chips, which are used for multiple purposes in motor vehicles and also are essential components of iPhones, personal computers, smart TVs, gaming systems, and more, increasingly became a problem during the pandemic. As remote working became more commonplace, demand for these chips increased greatly to accommodate the need for more personal computers and laptops. Additionally, trade restrictions placed on imports from China also caused difficulties, as many of China’s leading chip manufacturers had export restrictions placed on them by the United States. Additionally, some of these companies claim plans to expand manufacturing to the United States have been hindered by national security concerns raised by the Committee on Foreign Investment in the United States (CFIUS), due in part to the possible military applications of these products. The US-based Semiconductor Industry Association claims that the US’s share of global semiconductor manufacturing has fallen from 37% in 1990 to 12% today, and US manufacturers are pushing the White House to work with Congress to provide investment that they claim will support research and design operations and to increase domestic semiconductor production.
  • Pharmaceuticals: Shortages in certain drugs during the pandemic has also prompted a deeper examination into the pharmaceutical supply chain. A combination of increased demand for drugs to address the rising number of hospitalizations and the shutdown or slowdown of some international shipping ports led to key shortages. There are also concerns about being too reliant on China for key pharmaceutical ingredients, which has doubled over the last decade
  • Electric vehicle batteries: Global manufacturing of electric vehicle batteries is currently heavily concentrated in China, with Japan and South Korea ranking numbers two and three leading manufacturers, and the US back at number six, according to a report from S&P Global. With major US automobile manufacturers increasingly focusing on electric vehicles – including General Motors, which has announced that it intends to phase out all gas-powered vehicles by 2035 – reliable access to these batteries will be crucial in the coming years. 
  • Critical minerals: Rare earth minerals are used in a wide variety of applications, including airplanes, steel, light bulbs, wind turbines, and many more. Supply chain issues for these minerals long predate the COVID-19 pandemic, as China is the leading global producer of rare earth minerals. This problem of production being so heavily concentrated in a single country has been intensified by some of the Chinese government’s behavior in the past, including a brief restriction of rare earth exports to Japan in 2010 in response to a dispute in the East China Seas. These concerns have led to increased efforts from the rest of the world to ramp up rare earth mineral production, which has lowered China’s share over the last decade from around 98% down to 63%. In a continuation of efforts from the Obama and Trump administrations, Biden’s executive order will examine means of addressing weaknesses in the rare earth minerals supply chain. This will likely include both strengthening the US rare earth mineral industry and transitioning reliance on imports to countries with whom the US has friendlier reliance – primarily meaning a transition away from China.

For more information and discussion of opportunities, see The Freedonia Group’s extensive collection of off-the-shelf research. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Automotive & Transport      Construction & Building Products      Consumer Goods      Covid-19      Energy & Petroleum      Food & Beverage      Industrial Components      Machinery & Equipment      Metals      Packaging      Plastics & Other Polymers      Tariffs      Textiles & Nonwovens    

Can-demic: Aluminum Cans Are Still in Short Supply

A trend we first noted last summer on this page (“A Shortage in Cans for Food & Beverages: Why? Will It Last? What Are the Alternatives?” August 26, 2020) is still a problem 6 months later. A number of factors have contributed to a recent and continuing squeeze on the supply of aluminum cans. Those related to the COVID-19 pandemic include:

  • a shift to at-home consumption of beverages –  this trend favors aluminum cans, as they are a format for single servings and beverages in canned forms are easy to stack in pantries when attempting to create a stock to limit shopping trips
  • restaurant uncertainty – restaurants have faced a number of changes to capacity and operations over the past year, and many switched to offering canned beverages because they are easier to save, such as during periods of closure and reduced occupancies

However, the reasons behind this trend are not all due to the COVID-19 pandemic. Other factors impacting shortages are:

  • Performance advantages – cans have better light and gas barrier properties, which makes them an ideal container for beer, seltzers, and other carbonated beverages.
  • A change in aesthetics preferences – beverage suppliers have long preferred glass bottles as a packaging option due to the perception that they are a higher-end option, but that is changing, particularly as consumers look for a format that is easier to take to parks and festivals, where glass is commonly banned
  • Sustainability – cans are mostly made out of old cans, and aluminum has a good reputation for recyclability – although the specifics can be a little more complicated than catchy sustainability slogans often lead one to believe.
  • The explosive growth in the popularity of hard seltzers – nonalcoholic seltzers are really cutting into the market share of traditional colas and fruit-flavored sodas, and these seltzers are almost always packaged in cans. Since those beverages are increasingly being consumed instead of beer or other beverages that often use other packaging formats, that’s putting additional pressure on aluminum supplies.

Solutions?

  • Can suppliers are ramping up production.
  • Some beverage companies are looking outside the US and beyond the typical supply chain for additional can supply options.
  • Some beverage suppliers are wrapping unused cans in the label of products they still need to ship.
  • Beverage suppliers are limiting production of some of the niche brands to have plenty of supply available for their flagship products.
  • Some beverage suppliers are witching to alternative packaging – for beverages that might mean plastic or glass bottles.

For more information about trends and opportunities, see The Freedonia Group’s coverage of the packaging industry as well as food and beverage research from sister publisher Packaged Facts. Freedonia Custom Research is also available for questions requiring tailored market intelligence.

  Consumer Goods      Covid-19      Food & Beverage      Metals      Packaging