Following the pandemic, the United States experienced a strong wave of manufacturing investment, with factory construction and capacity expansion accelerating between 2020 and 2024. This was driven by a combination of supply chain reconfiguration and government incentives. However, this momentum is now clearly fading, with leading indicators pointing to a sharp slowdown in new project activity.
One of the clearest signals comes from the Index of Business Applications for Manufacturing Facilities. While applications fluctuated at elevated levels throughout 2024, momentum weakened significantly in early 2025. Total applications fell by 39.1% year-on-year in May 2025, for example.
As one of several indicators informing our forecast, the slowdown in new project applications points to a weaker pipeline of upcoming factory builds. We have, therefore, revised down our outlook for new factory construction in the US. The slowdown in new project applications signals reduced momentum in greenfield development, which is now feeding through into our forecast. As a result, our Q1 2026 forecast shows a much sharper decline in activity, with indexed growth falling to 76.0 in 2026, compared to 105.9 in our previous Q4 2025 view.
This sharp contraction in new manufacturing applications stands in contrast to the prevailing narrative around reshoring and near-shoring. While policy support and strategic intent remain strong, the data suggests that this has not translated into a sustained pipeline of new factory construction. Instead, companies appear to be delaying or scaling back new investments in response to macroeconomic uncertainty.
Interact Analysis
The rate of factory construction dipped significantly in 2025, with 2026 so far showing a similar trend. The inflation-adjusted index rose sharply from around 5,500–6,000 between 2017 and 2020 to a peak of 12,070 in December 2023, reflecting strong investment in large-scale factories. However, momentum reversed in 2024, with year-on-year declines exceeding 20% in multiple months. This weakness continued into 2025, with construction values falling 10 to 19% year on year and stabilizing at around 11,200–11,600, well below peak levels.
While factory application counts could suggest that fewer but larger facilities were still being built, the decline in total construction value shows that large-scale projects are also slowing. Because this metric reflects the total size and capital intensity of factories under construction, it confirms that overall manufacturing capacity expansion has weakened, not just small facility construction.
Interact Analysis
Demand Growth Met by Higher Utilization and Facility Expansions
The decline in new factory construction does not mean U.S. manufacturing is weakening. The U.S. already has a large and mature manufacturing base, so rising demand is increasingly met by expanding existing sites and increasing throughput rather than building new facilities. This is reflected in capacity utilization, which recovered from 62.5% in April 2020 to around 77–78% in 2021–2022. Although it softened in 2024, utilization stabilized and increased through 2025, rising from 74.5% in January to around 75.5% by December.
Interact Analysis
This trend indicates that manufacturers are meeting demand by using existing capacity more intensively, through upgrades and efficiency improvements, rather than expanding the overall factory footprint.
An increase in production capacity or reshoring does not necessarily mean a new factory is being built. In many cases, what is described as a “new factory” is actually an expansion or repurposing of an existing site.
For example, John Deere’s announced excavator facility in Kernersville, North Carolina, is a $70M expansion of an existing campus, not a greenfield factory. The site brings production previously carried out in Japan into an existing U.S. facility and adds around 150 jobs, but it reflects capacity relocation and expansion rather than the creation of a new standalone factory. This distinction is important when analyzing manufacturing growth. Output can increase through expansions, automation, or relocation without increasing the total number of factories. As a result, reshoring and investment announcements may signal higher domestic production, but they don’t always correspond to growth in the physical factory count.
Factory Construction Slows, but Select Sectors Continue to Grow
While some factory announcements may overstate the creation of entirely new facilities, this does not mean manufacturing investment or modernization has stalled. In fact, U.S. factories are becoming increasingly automated, as reflected in the rapid expansion of mobile robot deployments. The installed base of mobile robots in U.S. factories is projected to grow from ~103k units in 2023 to ~0.5 million by 2030, implying sustained annual growth of around 22–24%.
This acceleration in automation highlights that investment is not only going into new buildings, but also into upgrading existing facilities with advanced material handling and fulfilment technologies. Sectors such as Electrical & Electronics Equipment and Materials Handling Equipment continue to see strong activity, not just because they require capacity expansion, but because they enable productivity gains across the broader manufacturing economy.
As a result, even if headline factory construction growth appears subdued, the underlying reality is one of deepening automation and rising capital intensity per facility, supporting long-term efficiency improvements and throughput expansion across U.S. manufacturing.
