Publication of our 9th analysis of global industrial investment

‍Trendeo, Institut de la réindustrialisation and McKinsey join forces once again to unveil the findings of the 9th ^editionof the Global Industrial Investment Barometer. Since 2016, this study has been listing significant investments on an international scale, both in existing industrial units and in new production units, and analyzing the associated trends.In particular, it identifies projects and achievements that contribute to the development of the "factory of the future", based on technological and societal criteria: flexibility, digitization, energy efficiency, environmental protection, integration into the local economy and social conditions.

Key findings include

- Worldwide industrial investment fell by 26% to $1,120 billion, particularly in manufacturing and energy production.  

- On a regional level, investment in the United States continues to grow, mostly financed by European companies, while China's decline continues. Europe is experiencing a slow recovery, while India remains stable.  

- Europe maintains a stronger position in R&D than in production.  

" In 2024, the United States continues to attract industrial investment from all over the world. European groups, in particular, are making a strong contribution to investment growth in the Americas. The European Union, for its part, is making progress, but would need to refocus its groups in order to make a significant comeback. Yet Europe has significant positions, particularly in terms of R&D and the quality of its projects, which are assets for repositioning. This year, we're starting to see the spread of AI in factories ". David Cousquer, CEO and founder of Trendeo.

A worldwide decline in investment amounts over the past 12 months, with regional disparities  

After a year2022 marked by a significant drop in global industrial investment (around 20%), partly attributable to the consequences of the Russian-Ukrainian conflict, and a year2023 of stabilization (+5%), the year2024 marks a new downward trend: -26% in value and -3% in volume, to the tune of $1,120 billion. While this represents a substantial drop compared to 2023, investment levels should nonetheless remain above pre-COVID levels.

Beyond these consolidated figures, regional disparities persist: Asia and Africa are seeing a decline in investment, Europe is experiencing relative stability, while the American continent is seeing growth in industrial investment.

As a result, the American continent is poised to overtake Asia, with 36% of total investment in 2024 (28% in 2023), compared with 41% for Asia (54% in 2023). The United States becomes the leading destination for Foreign Direct Investment (FDI) in terms of amounts invested, ahead of the European Union. For the first time, FDI outstrips domestic investment, both in terms of the number of investments and the amounts invested. European countries are the leading investors in the United States.

The increase in industrial investment in India (+140% between 2023 and 2024) is not enough to offset the decline in China and the rest of Asia (respectively
-57% for China, which was already down 28% last year, and -81% for the rest of Asia).

The European Union's share will reach an all-time high of 12% in 2024 (versus 10% in 2023). Interestingly, the continent nonetheless captures 17% of the gigafactory investments announced for 2024, more than half of which come from foreign investors located outside the zone. Of the 171 gigafactory projects announced since 2016,Germany has captured 37 (22%), France 19, Hungary 11 and Finland and Spain each 10.  

A decline driven by a substantial drop in investment in the manufacturing and energy sectors

At $668 billion in 2024, manufacturing investment is down 37% on last year. If we exclude Samsung's investment of $227 billion in 2023 from the analysis, the decline in the manufacturing sector would be more moderate, but still substantial, at 20%.

At the root of this decline: a substantial drop in the electronics sector
(-$297 billion, or -58%), the chemicals sector (-$49 billion, or -28% due to a slowdown in demand for lithium-ion batteries and hydrolysis equipment) and the electrical equipment sector (-$64 billion, or -60% linked to reduced investment in battery and electric vehicle factories, particularly in Europe).This decline was partially offset by gains in the automotive (+$33 billion, or +51%) and oil & gas refining (+$9 billion, or +65%) sectors.

Investment in energy production (-13%) and R&D (-33%) has also fallen, both in terms of expenditure and number of projects, although there will be a noticeable increase in the average size of projects in these areas in 2024.

Some sectors, albeit of more moderate size, are seeing their investments grow. Investment in data centers is up by 16% (after a 72% increase last year), and is dominated by GAFAM, with almost $70 billion projected for 2024, mainly from and to the USA. Investments in mining and quarrying rose by +10%, driven by an increase in oil, copper and diamond extraction projects (75% of the total), and those in logistics by +11%. Investments in waste and water treatment almost doubled, from $15 billion to $29 billion. Finally, investment in agriculture increased fivefold, thanks to a major $750 million project in Algeria.

"Although industrial investment has fallen in France for the first time since2019 , the findings of the barometer highlight a logic of investment that remains virtuous and favors the resilience of the sector. This is excellent news in a difficult context. We see it as an opportunity for France to maintain the momentum of its industrial renaissance, by actively capitalizing on the sector's productivity levers, which are the strength of the "Label France": its infrastructures, its pool of technical talent, the excellence of its research and innovation centers, and the availability of decarbonized energy at reasonable costs." Matthieu Dussud, Associate Director, McKinsey France.

Europe is catching up with other regions in terms of virtuous investment, but has seen a marked improvement in R&D efforts.

The European Union has historically hada virtuous investment strategy. It still leads in environmental protection (reduction of carbon footprint, pollution and preservation of resources) and energy efficiency (reduction of energy consumption), but the gap is narrowing with other regions of the world. The Americas are catching up and moving ahead, particularly in terms of social conditions (improved working conditions, safety, training and compensation) and production flexibility.

On the other hand, while Asia remains the leading destination for R&D investment, Europe, which accounts for 30% of investment in this field, is now in second place ahead of the Americas, thanks to substantial investment in basic public research. Ile-de-France and Auvergne-Rhône-Alpes are among the top 30 regions for R&D investment (^20thand ^25th respectively). In terms of sectors, on a global scale, electronics(36%) and the automotive industry
(17%) have captured more than half of the amount invested in R&D since 2016.

Finally, investment in Artificial Intelligence continues to rebound in 2024, driven by investment in the technology's value chain. AI-driven projects in R&D are the most numerous, ahead of AI-driven projects in manufacturing and data centers. It's worth noting that, although Europe accounts for 1/3 of investments (origin), just behind Asia (36%), it hosts only 20% (destination), far behind Asia (42%) and the Americas (32%).

"Artificial intelligence is having a major impact on education and research. Engineering schools in particular need to understand how this technology is transforming industries, in order to provide coherent support for the acquisition of the necessary skills. In this respect, this year's report highlights the dual role of artificial intelligence: on the one hand, as a high-tech sector encompassing R&D, servers, semiconductors and data centers; on the other, as a tool for transforming industrial production. In its own right, AI is progressing as a field of study, driving innovations in infrastructure and computing. Applied to production, AI optimizes the use of resources, improves plant management, reduces transport costs and accelerates medical research. Applications are multiplying at all stages of production." Gwenael Guillemot, Director of the Institut de la réindustrialisation.

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