For its 8th edition, Trendeo, Fives, the Institut de la réindustrialisation and McKinsey have joined forces to unveil the findings of the 2023 Global Industrial Investment Barometer. Since 2016, this barometer has been measuring investment trends on an international scale, both in existing industrial units and in new production units. It also identifies projects and achievements that contribute to the development of the "factory of the future", based on technological and societal criteria: flexibility, digitalisation, energy efficiency, environmental protection, integration into the local economy and social conditions.
Among the key findings this year:
Investment volumes are stabilising worldwide, at USD 1,306 billion;
Despite low volumes, there is a virtuous investment logic in Europe, with specific measures to protect the environment, reduce energy consumption and use digital technologies;
54% of global investment goes to Asia, 28% to America and only 10% to Europe.
"Our 2023 study shows that Europe is lagging behind in terms of volume, but is undeniably ahead in terms of the quality of its investments. This outlines a desirable path in which Europe must increase its investment volumes, without compromising on quality and, in particular, the consideration given to investment". David Cousquer, CEO and founder of Trendeo.
Global investment volumes have stabilised over the last 12 months, with significant regional disparities
In 2022, industrial investment fell sharply (by around 20% compared with the first half of 2021), partly due to the consequences of the Russian-Ukrainian conflict. Over the past 12 months, however, the volume of investment has stabilised, reaching $1,306 billion. Industrial investment even rose slightly (+5%), with volumes close to those of 2021, confirming the post-Covid recovery, although there was a 15% drop between the second quarter of 2022 and the first quarter of 2023
However, these consolidated figures mask significant regional disparities. 54% of investment is directed towards Asia, with significant growth in investment in South Korea and Indonesia (+2,118% and +211% respectively) and a sharp fall in investment in China. Although it accounts for around 30% of investment in the Asia zone, investment in China is down by 28% compared with the last edition of the barometer. The country, which had already seen a sharp drop in foreign investment since 2020, is struggling to recover, with investment totalling around $210 billion a year, down 16% on the annual average since 2016.
The second region to benefit from global industrial investment is America (28%), and mainly the United States (more than 80% of investment in the region), which is probably benefiting from the initial effects of the IRA.
The enlarged Europe, meanwhile, is down slightly, attracting around 10% of global investment, compared with an average of 12% over the period 2016-2023. Looking more specifically at the European Union, the figure remains stable at 7%, as it did last year. The difference in investment in the enlarged EU compared with the previous period can be explained in part by the United Kingdom and Russia dropping out.
A clear upturn in manufacturing investment
With 900 billion invested between July 2022 and June 2023, manufacturing investment is up 10% over the last twelve months, 27% above its annual average since 2016.
Investment in energy production was down by 10%, particularly in renewable energies, with the disappearance of investment in offshore wind power and a very sharp fall in fossil fuels. Batteries are also down slightly, but well above their average. Conversely, there has been an increase in investment in solar energy and hydrogen production.
Investment in data centres (+72%), waste management activities (+99%) and R&D (+509%) rose sharply.
"The conclusions of the Trendeo study, like our record order book of €2.3MM at the end of 2022, can be explained by the clear inflection of trends that I saw coming since 2018: decarbonisation, digitalisation, automation, regionalisation. Fives is benefiting from strong investment growth in North America, with major automation projects in particular. In China, the Group is supporting an industry that is increasingly focused on decarbonisation. In Europe, where there are fewer major new projects, Fives is promoting the transformation of the existing industrial fabric towards a more virtuous model".
Frédéric Sanchez, Chairman of Fives.
Despite low volumes, high quality investments in Europe
European investment in industry is 40% lower than the world average ($276m per project in the European Union compared with $470m worldwide). Nevertheless, the European Union has a strong domestic investment capacity and a virtuous investment strategy.
Far ahead of other geographical regions, European investments announce specific environmental measures in 25% of projects (14% worldwide), as well as measures to reduce energy consumption in 11% of projects (6% worldwide). In addition, 8% of investments specify the use of digital technologies, a percentage equivalent to that in the Americas.
In France more specifically, the "Factory of the Future" criteria are on the rise in 2023. In particular, they relate to efforts in favour of the environment, digitisation and energy efficiency.
"The barometer demonstrates the European Union's virtuous investment logic, which is conducive to strengthening our industry of the future. This is excellent news. If we focus on France, we see an opportunity for industrial relocation, with major assets. These include major global champions feeding a very solid fabric and a dynamic of sectors, access to markets thanks to a very favourable geographical location, the quality of its infrastructure, its talent pool, the excellence of its research and innovation centres, and the possibility of having low-cost, low-carbon energy thanks to its energy mix. All these factors contribute to the power of the 'Label France'.
Matthieu Dussud, Associate Director at McKinsey France.
Efforts to decarbonise industry and energy production are continuing, particularly in the nuclear and air transport sectors.
As part of the 2023 barometer, detailed observations have been made for two growing sectors, both linked to the decarbonisation of the economy: SMRs and sustainable aviation fuels. The nuclear microreactor sector is expanding, with cumulative investment of around $35 billion since 2016. Recently, Sustainable Aviation Fuel (SAF) has also experienced a period of growth. Investments in this area will reach a cumulative total of 12 billion dollars by 2023.
Finally, around thirty sectors have deployed projects for fully decarbonised production sites. Here again, the European Union is in first place for the quality of its decarbonisation projects.
Social efforts, a major imperative
The barometer also analyses the criterion of "social efforts", which takes into account various issues such as local employment, the level of pay offered and training efforts. This criterion reflects different realities in different countries. Projects in India place greater emphasis on the employment of women, while in the United States subsidies for training highlight recruitment difficulties in short-staffed occupations in a country where full employment reigns. In France, the reindustrialisation drive is hampered by the availability of human resources.
"In France, recruitment tensions, and even shortages, are becoming a limiting factor in re-industrialisation. The attractiveness of these sectors, coupled with a high-performance training offer, are major challenges for industrial renewal. Gwenael Guillemot, Director of the Institut de la réindustrialisation.