In the last several years, Camoin Associates has worked on a wide variety of food and agribusiness projects across the US, gaining insight into factors impacting the industry and the related programs and policies that support the sector. The industry’s evolution is being fueled by the latest consumer preferences, new technologies, and a growing interest in building more resilient supply chains.

Growth in the beverage sector, along with a broader shift toward local food systems and investment in logistics infrastructure, continues to reshape the landscape. These trends are creating new opportunities for communities, small producers, and supply chain partners while also raising important questions about how to support the industry’s continued success.

Consumer Trends in the Beverage Industry

The beverage industry is booming. In the last five years, Beverage Manufacturing added more jobs than any other food and beverage manufacturing subsector in the US, growing by almost 52,000 jobs, an increase of 18%. To put that figure in perspective, the next-fastest growing industry was Bakeries and Tortilla Manufacturing, which added about 36,000 jobs (Source: Lightcast).

Breweries currently make up the largest share of the beverage industry, accounting for about one-third of all employment in Beverage Manufacturing in 2024 and growing by nearly 24,000 jobs in the last five years.

According to IBISWorld, the sector’s growth is driven by flavored malt and beverages like hard seltzers, which appeal to younger consumers. The industry is characterized by heavy competition, which creates a difficult market for both existing producers and new businesses because continual innovation is critical to maintaining interest and remaining relevant in the market.

The industry is undergoing a significant transformation, driven by consumer demand for sustainability, health-conscious products, and evolving social norms. These shifts present opportunities and considerations for economic developers and industry stakeholders looking to support growth and innovation within the sector.

A leading trend is the widespread adoption of eco-friendly packaging. As environmental concerns become more central to consumer decision-making, beverage companies are rethinking their approach to packaging. From compostable materials to recyclable alternatives and reduced plastic usage, businesses are investing in sustainable packaging innovations that align with shifting regulatory frameworks and public expectations.

This trend creates openings for local manufacturing, materials innovation, and recycling infrastructure development. For example, the Coca-Cola Company, Keurig Dr Pepper, and PepsiCo have implemented the “Every Bottle Back” initiative to focus on creating a circular economy. Companies implementing the “Every Bottle Back” initiative are creating 100% recyclable plastic bottles and focusing on limiting the use of new plastic in bottles.

Simultaneously, there is a growing emphasis on health, wellness, and alternative beverage options. Consumers—particularly younger generations—are looking for products that support healthier lifestyles, better sleep, and fewer hangovers. This demand is reshaping the product landscape.

Non-alcoholic beverages are no longer niche but are entering the mainstream, with a surge in offerings from companies like Athletic Brewing Co., Do Soi, and Curious Elixirs. These brands capture market share by catering to a demographic that values moderation without sacrificing flavor or experience.

The momentum behind non-alcoholic beverages is best demonstrated by venture capital (VC) funding for these brands in the last decade. In the three years from 2022-2024, the total reported VC funding for startups with “non-alcoholic” in their descriptions was over $457 million, compared to $267 million in the six years from 2015-2021.

Another critical shift is the rise of functional beverages. These beverages incorporate ingredients such as prebiotics, probiotics, vitamins, and electrolytes to support hydration and overall wellness. PepsiCo’s acquisition of Poppi in March 2025 was a major milestone in this space, demonstrating strong market confidence in gut-health-oriented beverages.

Other brands like Liquid IV and Liquid Death are gaining ground through strong positioning at the intersection of health and lifestyle branding. Influential voices, such as celebrities creating their own beverage lines, are shaping consumer perceptions and fueling demand through targeted media and digital platforms.

Shift to Local Foods

Over the past five years, the United States has faced significant disruptions in its food supply chains, exposing vulnerabilities in the way food is produced, distributed, and consumed.

Major global events, such as the COVID-19 pandemic and the Russian invasion of Ukraine, have triggered widespread supply chain shocks, leading to food shortages, price volatility, and logistical bottlenecks. These disruptions have highlighted the fragility of the global food system and the need to improve supply chain resiliency.

In response, there has been growing enthusiasm for strengthening local and regional food systems. By reducing dependence on long, complex supply chains, locally sourced food often provides more stable access to fresh produce, dairy, and meat products, even during supply shocks. Shorter supply chains also help mitigate risks associated with transportation disruptions, trade restrictions, and global commodity price fluctuations.

As a result, both policymakers and industry leaders are increasingly advocating for investments in local food infrastructure, such as regional distribution hubs and cooperatives, and the development of local and regional food brands and marketing campaigns.

Beyond concerns about resilience, a broader shift in consumer and institutional preferences has fueled the movement toward local food sourcing. Many consumers prioritize sustainability, seeking food grown using environmentally friendly practices with a lower carbon footprint.

Meanwhile, institutions such as schools and hospitals are also incorporating more locally sourced foods into their procurement strategies.

Institutions can play a major role in creating a new market for small-scale producers, allowing them to directly market to wholesale customers rather than navigate the complex, expensive process of creating retail market relationships and marketing to consumers. For example, the PA Beef to PA Schools program connects Pennsylvania beef producers to Pennsylvania school districts, which, in the 2022-2023 school year, connected over 6,400 pounds of local beef to schools across five counties.

Rural and Small-Scale Distribution

How do rural areas compete in food and beverage manufacturing and distribution? Rural areas face distinct challenges in distributing goods and scaling operations, particularly for small and mid-sized producers who often lack the infrastructure, market access, and support needed to grow. However, countless case studies from across the country highlight how collaborative models—many driven by nonprofits and regional partnerships—effectively address these barriers and enable rural producers to compete in broader markets.

One of the most effective strategies is the development of shared-use infrastructure. In regions where capital investment is a significant hurdle, facilities such as commercial kitchens, storage spaces, and processing centers are made available to multiple producers. This approach lowers overhead costs and allows businesses to scale without requiring substantial upfront investment.

Another key factor is the creation of aggregation and distribution networks. Small producers in rural areas typically operate at volumes too low to reach institutional or retail markets on their own. These models facilitate access to larger markets by pooling products through centralized hubs. In addition, they offer flexible, cost-effective distribution solutions that make logistics feasible for lower-volume producers.

Business support services also play a critical role. Many rural producers benefit from targeted advice, technical assistance, and product development support that help them improve quality, meet regulatory requirements, and grow strategically. These services are often tailored to the unique needs of rural enterprises, ensuring they are both practical and impactful.

Logistics, Distribution, and Transportation for the Food and Beverage Industry

As supply networks for food and beverages become more complex and the industry faces increased competition, the logistics side of the industry has become increasingly critical to the sector’s growth.

From 2014-2024, the fDI Markets Database tracked 531 cross-border investment projects related to logistics, distribution, and transportation for the Food and Beverage industry, totaling an estimated $33.6 billion in investment. Texas attracted the most investment, with $441 million of capital expenditures across 51 projects.

Investment in Food and Beverage logistics is critical for ensuring a resilient domestic food supply chain and is a strong indication of the system’s modernization. Take, for example, Walmart’s three-pronged approach to making transformative modernization investments in its grocery network:

1. Building five new high-tech perishable distribution centers (DCs)
2. Expanding four existing DCs to add 500,000 square feet (SF) of automation per site
3. Retrofitting one DC with high technology integration as a pilot to determine how best to retrofit others

These investments are taking place across the country in California, Texas, South Carolina, Illinois, New Jersey, Minnesota, North Carolina, Indiana, Tennessee, and Florida.

According to the fDi Markets database (from the Financial Times Ltd, 2025), $3.4 billion of cross-border capital was invested in logistics, distribution, and transportation projects for the Food and Beverage industry in 2024 alone. Adjusting for gross domestic product (GDP), states like North Dakota, Delaware, South Carolina, and Illinois saw the most momentum from these investments in 2024. Meanwhile, another $1.5 billion was invested in cross-border projects that include cold storage or refrigerated shipping.

Other key projects in the last year include:

• November 2024: Minnesota-based CHS, a farmer-owned cooperative, will expand and upgrade its grain terminal in Kindred, NC. Upon completion, the facility will support a capacity of 5.2 million bushels. The facility has on-site rail access that connects it to new and existing grain processing plants in North Dakota.
• September 2024: Georgia-based Americold announced it will expand its cold storage warehouse in Fort Worth, TX, investing $123 million in the project.
• February 2024: Chick-fil-A announces it has opened a new distribution facility in Hutchins, TX, representing $100 million of investment and spanning nearly 290,000 SF of space. The major distribution facility will service 200 restaurants in the region.

Implications for Economic Development

The beverage industry’s rapid growth, particularly in health-conscious, functional, and sustainable product lines, offers significant opportunities for economic developers to support innovation, attract investment, and create quality jobs.

Shifting consumer preferences are driving demand for alternative beverages, eco-friendly packaging, and wellness-oriented ingredients and fueling growth in advanced manufacturing, research partnerships, and circular economy initiatives.

Communities that invest in adaptable infrastructure, research and product development capacity (R&D), and talent pipelines in food science and packaging technology will be better positioned to support business attraction and expansion in a competitive market.

At the same time, the movement toward local food systems and supply chain resilience is opening new pathways for rural and regional economic development. Shared-use infrastructure, aggregation and distribution networks, and institutional procurement create more inclusive market access for small and medium-sized producers.

Coupled with large-scale investment in logistics and distribution facilities, there is a growing need for transportation improvements, workforce training, and coordinated support services.

Economic developers have a critical role to play in aligning local assets with these evolving industry dynamics to strengthen food system resilience, spur rural innovation, and build long-term regional competitiveness.

Camoin Associates is a trusted economic development and business prospecting consulting firm that helps communities and organizations achieve sustainable and equitable growth through expert analysis, effective strategies, and intentional connections.

By providing valuable insights, best-in-class data, and personalized, actionable strategies, we empower our clients to make well-informed decisions that drive economic success and foster strong, competitive markets.

Learn more about our Industry Analytics and Strategy services

Related Articles:

• US Food and Beverage Production Sector Trends
• Changing Consumer Trends Drive Increased Investment in Alternative Proteins and Plant-Based Foods Industry

About the Authors

Victoria “Tori” Conroy is a Senior Project Manager at Camoin Associates. She has a Master of Public Administration degree and a graduate certificate in local government management from Virginia Tech, as well as a B.A. in Political Science from Virginia Commonwealth University. Before coming to Camoin Associates, Tori worked for several different economic development authorities and has experience managing publicly owned industrial properties, building community partnerships to support workforce development, and developing and executing business retention and expansion programs. Tori has also led and implemented business attraction campaigns nationally and abroad.

Angela Hallowell is a Senior Economic Data and Research Analyst at Camoin Associates. She holds Master of Science and Bachelor of Science degrees in Economics from the University of Maine. Angela’s work spans diverse topics across the country, including economic and fiscal impact studies, real estate market analyses, workforce gap assessments, housing needs studies, and targeted industry strategies. She is passionate about leveraging data and research to craft compelling narratives that create economically healthy, vibrant, and sustainable communities.

This article originally appeared in the February 2025 issue of Expansion Solutions magazine.

Digital information and content continue to grow across our daily lives and economy. This includes information and content related to streaming, coding, social media platforms, research, marketing, business services, personal services, health services, education, and more.

Additionally, artificial intelligence (AI) is creating new data and information at speeds much greater than ever before. This creates increased demand for the infrastructure and systems that move and store data, including data centers.

Regarding data center growth, JLL reports, “Data center demand is growing at an exponential rate, with data creation expected to increase at a 23% CAGR through 2030. Rising generative AI workloads have the greatest impact on data storage, followed by continued cloud and hyperscale growth. Investors are furthermore drawn to the sector by the sticky tenant proposition with high renewal probability.”

This article provides insights on the recent market, real estate, and investment trends in the data center industry and how critical factors like energy, land use, and local acceptance impact investment locations.

Data Centers: Revenue and Investment Trends

As reported by Cushman Wakefield, data center revenues have been experiencing annual growth, which is projected to continue. Furthermore, the projected demand is expected to be driven by AI.

Projected Revenue Trends in Data Centers 2020-2028

2020: Total global revenues $91.7 billion

• Non-AI Colocations: $83.2 billion
• Al Colocations: $8.5 billion (9.3%)

2028: Total global revenues $212.1 billion

• Non-AI Colocations: $136.8 billion
• AI Colocations: $75.3 billion (35.5%)

Source: Cushman Wakefield

Investment trends mirror recent and projected growth in data center revenues. FDI Markets tracks investment and related data on data centers. Based on this data, Between 2019 and September 2024, for all projects invested in the US:

• A total of 429 projects created 40,001 jobs, with an average project size of 93 employees.
• The total capital investment for these projects was $197 billion, with an average project size of $459 million.
• 2024 was a peak year for 2029-2024, with 118 projects, 17,194 jobs created, and $68.5 billion invested.
• The source country from which the investment was made into the US was led by the United States, with 338 projects out of the 429 total, or 78.7%. Sweden, Hong Kong, Australia, Japan, and Ireland are the next five source countries with the highest projects in the US.

In terms of companies in which investment was made, the big tech companies (Google, Microsoft, Meta, and Amazon) were all at the top of the list, along with digital infrastructure and real estate companies.

Data Centers: Real Estate and Location Trends

The increasing demand, revenues, and investment in data centers are creating opportunities for real estate development across the US and the Americas. Vacancy rates have decreased due to supply being constrained by longer project completion times and constrained energy supply while new capacity for energy is in the pipeline. Delays are also attributable to longer times needed for equipment and related supplies.

Regarding vacancy rates, CBRE reported that “… overall vacancy rate for primary markets fell to a record-low 2.8% in H1 2024 from 3.3% a year earlier, while the overall vacancy rate for secondary markets fell to 9.7% from 12.7% over the past year.” Similarly, Cushman Wakefield reports for 2024: “With power and component lead times constraining delivery of new supply, vacancy region-wide has fallen to 3%, driving over 80% of deliveries to be pre-leased in major markets and pushing lease rates higher.”

These trends result in investors and companies moving beyond the typical primary markets. Cushman Wakefield reports, “Interest in large-scale power availabilities, plentiful land and less strict latency requirements for AI, has driven hyperscalers and operators to expand in a host of historically peripheral markets such as Indianapolis, Kansas City, Reno, Charlotte, Salt Lake City, Minneapolis, Philadelphia, Montgomery, among many other outlying areas.” Putting all of the factors together, Cushman Wakefield produces a list of top ten and emerging markets.

Summary and Conclusions

In attracting and supporting data center expansion and attraction, economic and business developers should assess their community and region in terms of critical factors that drive locations. Most importantly, this includes:

• Assessing whether your community has the assets required, including energy and grid capacity and diversity, water, and land, with energy and land capacity being the top criteria
• Assessing and confirming the willingness of the region and communities to support data centers in terms of zoning and land-use regulations, incentives, and overall public support.

Both of these can best be answered and reflected in local and regional economic plans and strategies that article targeted goals and actions.

Regarding location factors and specifically workforce, economic and business developers often overlook the importance of labor because data centers are not seen as dense with workers per square foot of space.

However, workforce and skill gaps are impacting every industry, and a recent JLL report found, “Finding the right talent remains a challenge for data center operators, and the issue is becoming more acute given the rapid expansion of the sector in recent years. Roles in the industry can be highly technical in nature, given the complexity of data center operations. Data center development is also expanding into rural areas with limited labor pools, presenting a unique set of staffing challenges. Given the technical nature of the data center industry, only about 15% of applicants meet the minimum job qualifications. Consequently, positions can often take 60 days or more to fill. Due to these hiring challenges, it is estimated that 10% of data center roles at existing facilities are unfilled, more than twice the national average across all industries.”

A key takeaway for economic and business developers interested in data centers is to be prepared. Markets and economic dynamics for data centers are changing rapidly along with technology. Therefore, success in supporting and attracting investment typically requires local and regional expertise and a commitment to prioritizing them as an ongoing target.

Camoin Associates is a trusted economic development and business prospecting consulting firm that helps communities and organizations achieve sustainable and equitable growth through expert analysis, effective strategies, and intentional connections.

By providing valuable insights, best-in-class data, and personalized, actionable strategies, we empower our clients to make well-informed decisions that drive economic success and foster strong, competitive markets.

Learn more about our services

This article originally appeared in the December 2024 issue of Expansion Solutions magazine.

The Food and Beverage Production sector in the US is a significant contributor to the economy, accounting for nearly 3.5 million jobs and over $534.3 billion of GDP in 2023. This sector includes Agriculture, Fishing, and Food and Beverage Processing subsectors, with notable job growth in food manufacturing, particularly beverage production.

States in the Midwest lead in employment concentration within this sector compared to the US as a whole and are seeing billions in Food and Beverage Manufacturing investments in 2024 so far. Within 2024, cross-border capital investments in the Food & Beverage industry have surged, driven by both foreign and domestic companies.

The key to strengthening the Food and Beverage industry is investing in transportation and warehousing, especially in cold storage, to strengthen the supply chain and build a resilient food economy. Economic growth and food security stem from supporting technological innovation and adoption, improving transportation infrastructure, and encouraging capital investment.

Why is this the case? Where are employees concentrated in the US? Where are investments coming from and how can the industry position itself for growth? In this article, we provide the latest trends in the Food and Beverage Production sector and provide insights on how to support a growing industry.

Industry Overview

Job Growth by Subsector

The Food and Beverage Production sector in the United States accounted for nearly 3.5 million jobs throughout the United States in 2023, with an approximately 40%/60% split between Agriculture and Fishing vs. Food and Beverage Processing. The Food and Beverage Production sector contributed over $534.3 billion of GDP to the United States economy in 2023, 2.2% of the nation’s total GDP.

During the five years from 2018-2023, nearly all of the job growth occurring in the Food and Beverage sector was generated by Food Manufacturing subsectors, which together grew by 10% and added over 200,000 jobs, compared to almost no growth in the agriculture and fishing industries. Comparatively, job growth across all sectors in the US was 4% during the same time period. Beverage manufacturing is by far the subsector that grew the most over the last five years, adding over 63,000 jobs for a 23% growth rate. Breweries accounted for just over half of the growth in beverage manufacturing in the last five years.

Other high-growth subsectors are animal food manufacturing (+17%), the bulk of which was in the pet food manufacturing industry, as well as other food manufacturing (+16%).

Employment Sector Distribution

In the United States, a quarter of all jobs in the Food and Beverage sector are in Crop Production, followed by 16% in Animal Slaughtering and Processing. Other key subsectors are Animal Production, Bakeries/Tortilla Manufacturing, and Beverage Manufacturing.

While the last five years have seen relatively little shift in the overall distribution of employment across subsectors, Beverage Manufacturing notably jumped from 8% to 10% of the sector, while Animal Production shifted down from 15% to 13% from 2018-2023. This signals that although most of the sector has seen relatively little disruption over the past five years, Beverage Manufacturing is growing rapidly, with many new products arising to meet changing consumer preferences. Examples include sparkling waters, non-alcoholic cocktail mixes, canned cocktails, and hard seltzers.

Concentration (LQ) by State

Several states stand out for having high Location Quotients (LQs), which are used to measure the intensity of a state or region’s employment concentration within a given industry. States in the Midwest – Nebraska, South Dakota, and Iowa – have the highest concentration, each with 3-4 times the share of employment in food and beverage production compared to the US as a whole. Other key Midwest states like North Dakota, Arkansas, and Wisconsin, along with Idaho unsurprisingly round out the top states for food and beverage production.

On the whole, states in the South tend to lag the rest of the nation in food and beverage production, with their economies focused on other industries. Only six of 17 Southern states (as defined by the Census Bureau) have an LQ greater than 1.0, with Arkansas being the only exception.

Major recent investments in states with strong employment concentration include the following:

• In February 2024, Switzerland-based Nestle announced a $175 million investment in Webster County, Iowa to expand manufacturing operations at a Purina PetCare plant
• In February 2024, Netherlands-based Bosch Growers announced a $50 million investment in Kentucky to establish a new greenhouse, which will grow and distribute bell peppers and berries for the US market.
• In April 2024, Japan-based Kikkoman announced an $800 million investment in two Wisconsin facilities, including a 22,300-square-foot new production facility to brew soy sauce in Jefferson and an expansion of its existing brewing facility in Walworth.
• In June 2024, Schwan’s, a subsidiary of South Korea-based CJ Corporation, announced an investment in a new 65,000-square-foot production facility and campus in South Dakota to produce foods under the company’s Bibigo brand. The facility will employ an estimated 600 people.

Recent investments point to the global nature of food and beverage production.

Recent Investment Activity in Food and Beverage Production

Food and Beverage Manufacturing

Key capital investment in the United States Food and Beverage sector for 2024 through July, by the numbers:

• $7.2 billion of total cross-border capital investment across 94 projects
• 53% of investment is derived from domestic companies, with 47% coming from foreign sources
• Over $1 billion of capital investment each in Seasoning and Dressing, Fruit/Vegetable/Specialist Foods, and Dairy Products

In the first seven months of 2024, nearly $7.2 billion of cross-border capital expenditures across 94 projects were announced across the United States. Major cross-border capital investment is being driven nearly equally by foreign and US-based companies, with 53% of the cross-border capital flow being sourced by US-based companies and 47% from foreign companies.

Through July, Wisconsin attracted over $1 billion of capital investments in the Food and Beverage sector, with $800 million coming from Japan-based Kikkoman to expand soy sauce production. Meanwhile, other key states like Iowa, Texas, and Indiana have attracted over $500 million in investments each.

Alternatively, Texas is the top domestic origin of capital investment flowing into cross-border projects in the US so far in 2024, with Texas-based companies announcing $1.1 billion in investments across 5 projects. Other key domestic sources include New York, New Jersey, and Virginia companies. Key international investments in US projects derive from Japan, Switzerland, Canada, and South Korea. Japan-based companies alone accounted for $1.2 billion of capital expenditures announced so far in 2024, which is by far the largest international source.

Over the last five years, capital investment in Food and Beverage projects has remained strong, although the number of projects dipped slightly in 2023. In the first seven months of 2024, the 94 projects announced throughout the country represent strong growth in capital investment, outpacing the same seven months of 2023 by about 15% and indicating that 2024 will likely be a strong year of development in the sector.

Key Investments in Warehousing and Distribution for the Food and Beverage Sector

Transportation and warehousing projects relating to Agribusiness have grown rapidly over the last five years. In 2019, only six cross-border projects focused on improving the supply chain for food and beverage products. In only the first seven months of 2024, that figure has ballooned to 22 projects across the United States. In 2024 so far, 16 of these projects (73%) relate to cold and frozen storage or transportation, representing a major sector for growth in the sector.

The demand for cold storage is high for several reasons. Over the past several years, multiple disruptions — from the COVID-19 pandemic to geopolitical unrest — have highlighted the need for a stronger supply chain and logistics system to transport our food supplies nationwide. Enhanced cold storage infrastructure helps to improve resilience to these disruptions, particularly for fresh and frozen foods.

Meanwhile, new advanced automation technologies have made cold storage developments more efficient, offering increased scale and volume for storage and more efficient logistics services at the facilities. For example, NewCold’s new facility in McDonough, GA, which opened in 2024, is able to utilize 42 meters of vertical space to store 85,000 pallets. Large-scale automated layer-picking done by seven double-stacker cranes enables this capacity. According to the facility’s press release in 2022, it represented a $333 million cold storage investment. Similarly, a newly opened Lineage cold storage facility in Hazleton, PA, will integrate advanced automation like cranes, rail-guided vehicles, and automated layer-picking to optimize the efficiency of the 386,000 SF facility.

Georgia, with an existing strength in transportation and logistics, is playing a major role in this new investment in transportation, logistics, and distribution projects related to agribusiness. Of the 22 total projects in the sector announced this year, seven originate from Georgia-based companies headquartered in Atlanta and Gainesville. Meanwhile, four of them involve projects that are set to occur throughout Georgia. Overall, half of all agribusiness-related logistics and distribution projects are either occurring in Georgia or being developed by Georgia-based companies.

Meanwhile, other established US transportation and logistics hubs like Kansas City and Chicago are also hotspots for new development in food and beverage logistics, with two new facilities near Kansas City and three near Chicago. These sites are being strategically positioned next to other major transportation infrastructure to allow for greater efficiency in distribution to major markets.

For example, a new CJ Logistics facility based 30 miles outside of Kansas City was strategically located due to its nearby access to both a major interstate and a transcontinental intermodal facility. This location will have the unique advantage of providing access to major markets while also allowing for significant cost-savings on logistics and greater shipping efficiency.

That said, developments are also occurring outside of major transportation and logistics hubs, as the map below demonstrates. Overall, 2024 announcements for investments in Cold Storage that will serve the Food and Beverage sector are primarily located along the eastern half of the US, with one exception in Boise, ID.

Investments in Cold Storage for the Agribusiness Sector, 2024 Through July

Recent announcements for cold storage and logistics investments in 2024 include:

• May 2024: CJ Logistics America, a subsidiary of South-Korea-based CJ Corporation, announced a new cold storage warehouse in New Century Kansas. This facility will contain 291,000 SF of warehouse and will be served by rail. The new facility will be attached to an existing Upfield plant, where it produces plant-based foods under brands like Country Crock, I Can’t Believe It’s Not Butter, and Imperial. Approximately 100,000 SF will be available for other customers to use.
• April 2024: Georgia-based Arcadia Cold announced three new cold storage facilities, with two in Chicago, IL totaling 600,000 SF and one in Charleston, SC, that will add 262,000 SF of cold storage. Combined, these three projects will add nearly 115,000 pallet positions. These facilities will serve clients such as food manufacturers, retailers, and service providers.
• February 2024: Atlanta-based Americold announced a $127 million project to develop a 335,000 SF temperature-controlled warehouse in Kansas City, MO. The facility will be a strategic collaboration with Canada Pacific Kansas City and will operate refrigerated rail service between Midwest markets and Mexico.
• March 2024: FreezPak Logistics, in collaboration with Karis Cold and L&B Realty Advisors, announced a new 245,400 SF cold storage development in Suffolk, VA, near the Norfolk, VA, port. The facility, which will have 35 loading docks, will support nearly 50,000 pallet positions. According to the press release, the site will offer other services such as blast freezing, cross-docking, LTL and FTL transportation, repacking, overseas container plug-ins, e-commerce, and USDA/FDA inspections.

Implications for Economic Development

Prioritizing the growth of transportation, warehousing, distribution, and logistics networks is essential to economic development. A lack of infrastructure and business support creates significant barriers to expanding business capacity and scalability. The Food and Beverage sector, in particular, requires timely and efficient transportation, cold storage, and accessible distribution networks in order to grow, maintain food safety standards, and comply with USDA guidelines.

• Communities across the US can take advantage of new innovations and increased foreign direct investment (FDI) in food and beverage production by helping existing businesses understand and adopt new technologies for greater efficiency.
• Strengthening the US supply chain for food and beverage processing promotes sustainable growth and enhances agribusiness through domestic job creation and increased investment.
• Value-added food products contribute to sustainable food ecosystems for local consumption and present opportunities for both domestic and international trade. Examples include yogurt, ice cream, pre-packaged salad kits, jams, and jerky.
• Investment in transportation, warehousing, and logistics options, especially in rural communities, can reduce costs that currently hinder business growth and product movement. Additionally, such investments support business attraction efforts by providing the infrastructure needed for incoming food and beverage producers and processors.
• Attracting foreign and global investment requires collaboration between regions, communities, and state and regional partners to develop effective strategies and conduct foreign direct investment and trade analyses.

Learn more about Camoin Associates’ Industry Analytics and Strategy Services

Related Articles:

• Changing Consumer Trends Drive Increased Investment in Alternative Proteins and Plant-Based Foods Industry
• How to Capitalize on Foreign Direct Investment (FDI) Growth Trends for Business Attraction

This article originally appeared in the July/August 2024 edition of Expansion Solutions magazine.

The 2024 solar eclipse brought tourists from across the nation to the path of totality. This was noticeable in the stopped traffic on highways, crowds on mountains and around lakes, and on every social media platform for days to follow. While sungazers thought we were lucky to have experienced such a tremendous event in our lifetimes, the truly fortunate individuals were those who hosted guests on their properties and profited off the rare celestial experience. Hospitality providers are reporting record-high profits following the solar eclipse, shining a light (pun intended) on the opportunity associated with what we are calling “agriexperiences.”

The input costs associated with farming have been steadily rising over the past few years. In fact, according to the United States Senate Committee on Agriculture, Nutrition, and Forestry, “Since 2020, the total costs paid by farmers to raise crops and care for livestock increased by more than $100 billion, or 28%.” Furthermore, according to the 2022 USDA Census of Agriculture, every factor of production expenses — feed, livestock purchased, hired labor, cash rents, supplies and repairs, seeds, chemicals, fuels, interest, and other — has increased in cost from 2017, with the most significant increase being in feed at $25.7 billion total.

Customers cannot justify paying farmers’ market prices when supermarket prices are closer to what they are used to. At the same time, farmers must keep their pricing in line with the cost of doing business to maintain an operable business.

So, how are these farmers staying in business? Many have become agritourism providers, adding a hospitality arm to their farming business as a way to generate additional income. The profits from hosting overnight stays, classes, hayrides, goat yoga classes, and more help farmers make ends meet and maintain the farming lifestyle. In fact, according to Lancaster Farming, there are over 86,000 agritourism operators around the country as of April 2024.

Why Agritourism?

While finances are an excellent reason for hosting agritourists, there are a wealth of benefits beyond simply profit. Perhaps most importantly, hosting and engaging tourists helps build a strong brand and turns one-time visitors into dedicated customers and brand ambassadors who will share the products purchased while visiting the farm and their positive experiences with friends and family.

Welcoming guests onto a farm also means allowing them to see the behind-the-scenes aspects of farm life, giving them a greater appreciation for the goods produced and sold. This awareness of time, quality, and process can increase a customer’s willingness to pay higher prices as they understand the value of the inputs and, therefore, the value of the output.

This understanding is key at a societal level, as the information will be shared at the grocery store or across a dinner table, and building public awareness of the value of local food is crucial to ensuring that it is purchased.

Agritourism is an advantageous side business because it is separate from farming. The process, needs, and outputs are different, meaning that if one is failing, the other may survive. This diversification is a powerful tool for ensuring success and prosperity. At the same time, agritourism is a large enough revenue generator that farmers can focus on just two large ventures rather than trying to take on many different and time-consuming smaller ventures (i.e., farming + breeding horses + selling wedding bouquets + packaging microgreens, etc.). This approach not only supports financial stability for the farmers but also enriches the community, making agritourism a win-win for both farmers and their visitors.

Agritourism is especially important for small and medium-sized farms that lack the benefits of economies of scale enjoyed by larger agricultural businesses. These farms often struggle with higher per-unit costs and lower overall production volumes, making it challenging to compete in traditional agricultural markets.

But how do you make agritourism successful? Many farmers considering agritourism ask this question, and this year’s solar eclipse offered a whisper of an answer. Ruth Pepler, owner of Dogwood Hills Guest Farm in Harriet, Arkansas, told me that offering lodging and farm-to-table breakfast and dinner during the eclipse covered their expenses (edible store inventory and much of the pantry items) for the summer. Given what I know from working on their farm, this is significant, and they are not the only ones who profited from the event.

Lessons on Agriexperiences from the Eclipse

My research into farms throughout the eclipse’s path of totality showed that many opened up their properties to sungazers for a price. While some allowed cars to simply park on the property for $10 per vehicle, others offered overnight stays, farm-to-table dinners, and more. For example, Better Farm in Redwood, New York, offered a “Path of Totality Package,” a two-night stay for two with family-style farm-to-table breakfast and a cocktail party for $400. Similarly, Poulette Farm in Thayer, Missouri, sold tickets to “Something Shady on the Farm,” which included a pair of eclipse glasses, a farm-to-table meal, and commemorative items for $275 per person.

While these packages would be incredible any day of the year, the eclipse significantly increased the demand and the price. Essentially, agritourism providers and those who supported them used the eclipse to create an agriexperience, a unique event that drove business to their farms.

The eclipse was unusual in that it was over very quickly, it was a rare celestial event, and only certain places could see it in totality. What we can learn from this is the importance of scarcity and exclusivity when creating agriexperiences.

No Eclipse? Create Your Own Agriexpeirences

While allowing people a peek into farm life is special, it is no different than what other farms can provide, and not worth driving more than a few hours to visit. In order to draw that kind of attention, farmers and communities must try to differentiate themselves.

One way to create successful agriexperiences is to determine the area’s niche. If the farm is located in Appalachia, tap into Appalachian lore by inviting cryptozoologists to give talks, having local storytellers come for a bonfire, or leading a walk through the woods after dark.

If the farm is located in a region known for growing a specific crop, such as peaches, host a peach festival during peak season and make an event out of it by inviting the local news station, organizing a parade, having a peach pie contest, or inviting people to pick peaches and pay by the basket.

Importantly, these events should be limited in size and frequency. If anyone can go pick peaches on the farm at any time, there is no excitement. However, if the last weekend in May is the peach festival on the farm and there are only so many tickets, people will scramble for them.

Another way to create appealing agriexperiences is to lean into history and tradition. Do a bit of research to uncover the historical values or traditions of the town and find ways to bring those back. Not only is this a fun way to change the normal routine in town, but it is an educational opportunity as well. For example, if your community used to have a big square-dancing scene, host an annual barn dance with local musicians and a farm-to-table dinner. Limit the tickets and ensure that the event is well covered in the news and on social media. This will become an event that people look forward to every year and will help get them familiar with the farm and farmers.

A final tip for community developers or farmers when creating agriexperiences is to lean into small happenings and make them big. People like to be part of something. A big reason so many people wanted to see the eclipse was the desire not to miss out and to be part of the conversation.

People like to get excited about an event, even if they did not know about it before you brought it to their attention. Even something as small as the first weekend of the year that the spring peepers sing their song could be turned into an all-night banjo-playing, frog-listening event at the farm. What was once just background noise could become the sound that visitors travel and gather to listen for so they can say they heard the first peep.

How Can Economic Developers Support Agritourism?

Economic developers can play a crucial role in supporting agritourism within their communities by assisting with promotion and marketing, licensing, technical services, and insurance processes.

Promotion and Marketing

Promotion and marketing are essential to increase the visibility of agritourism providers and highlight the fun opportunities available. Economic developers can reach a wide audience through local tourism websites and social media, creating attractive promotional videos, and engaging with their networks. This support is particularly crucial because marketing and social media management are not typically within a farmer’s skill set.

Economic developers can bridge this gap, providing the expertise needed to create compelling campaigns that farmers may not have the time or experience to execute. These marketing and promotion efforts can be further amplified by collaborating with local businesses and tourism boards to turn simple farms into well-known, in-demand agritourism locations.

Licensing

Another key role for economic developers is related to licensing. Navigating the agritourism licensing ecosystem can be daunting for farmers because it is often perceived as complex, mysterious, and time-consuming. Many are unfamiliar with the intricacies of local regulations, zoning laws, and health and safety standards required to host tourists on their properties and are concerned that they will face legal repercussions for licensing mistakes. This fear and the unfamiliar territory can deter farmers from becoming agritourism providers.

Economic developers can demystify the process by providing clear guidance, support, and resources. By helping farmers understand the specific licenses needed, assisting with paperwork, and facilitating connections with regulatory bodies, economic developers can ease the burden and allow farmers to spend their time focusing on their business.

General Technical Services

Beyond licensing, general technical services are another vital component of supporting agritourism. Providing workshops, training, consultations, and mentorship on topics such as tourism, sustainable practices, digital marketing, and business administration can help providers be successful and fill any gaps in their skills or knowledge.

Insurance

The final point at which economic developers can be of most help is the topic most widely discussed at agritourism conferences: insurance. Inviting people who are unfamiliar with the animals, terrain, and infrastructure to your property can be a serious safety risk, and insurance is critical to providing protection for both farmers and visitors.

Economic developers can play a pivotal role in helping farmers identify and secure insurance coverage that meets their needs, offers adequate protection, and aligns with local agritourism requirements.

Economic

If we learned anything from the recent solar eclipse (other than the importance of wearing protective eyewear), it is that experiences and events help drive demand at agritourism businesses. While we may not have another solar eclipse next year, agritourism providers can create agriexperiences to attract tourists, and economic developers can provide marketing and technical support.

This collaboration to drive agritourism not only supports the financial well-being of farmers but also enhances local economic growth and encourages appreciation of locally grown food and rural landscapes.

Learn more about Camoin Associates’ Industry Analytics and STRATEGY services

Related Articles:

• How Agritourism is Saving American Farms
• No Hotels? No Problem: How Glamping Can Fill Lodging Gaps in Rural Areas

The Food Manufacturing sector has seen steady growth over the past five years, particularly in animal processing and bakeries. However, when looking at the food industry as a whole, traditional industry data sources (NAICS) overlook food categories and emerging trends. Alternative proteins and plant-based foods are one example of this.

In this article, we take a deeper dive into the growing $8 billion alternative proteins and plant-based foods industry, which has been on a sharp upward trajectory in recent years, with growing market penetration when compared to traditional animal-based products and $3.2 billion in investments since 2018.

As global leaders in alternative protein and plant-based food production, opportunities to expand food tech hubs in the Midwest, California, and Washington State are being supported by capital investments and venture capital funding.

Opportunities exist in other regions as well and will continue to present themselves in this growing, global market. While there is potential for cultured meat and plant-based alternatives to create market disruptions to traditional animal-based food production, there are also many opportunities for growth and sustainability by leveraging Food Tech hubs, upskilling the workforce, and innovating for affordability and sustainability.

US Food Manufacturing Sector Overview

The Food Manufacturing sector accounts for over 1.7 million jobs across nearly 40,000 business locations across the United States as of 2023. The sector has posted strong job gains since 2018, adding over 122,000 jobs over this five-year period. This 7% growth outpaces the 4% growth experienced by the overall economy during the same time period.

Animal Slaughtering and Processing is the largest subsector and accounted for nearly one-third of employment in the Food Processing sector in 2023, with almost 550,000 jobs. Nearly all 4-digit subsectors saw employment growth over the last five years, with the sole exception of Seafood Product Preparation and Manufacturing. On a more detailed level, Meat Processed from Carcasses was the fastest-growing sub-industry from 2018-2023, adding over 19,000 new jobs (15%), followed by Retail Bakeries (+16,474 jobs, 16%).Traditional sources of industry data like those presented above indicate strong growth in animal-based food products in the United States. However, these traditional sources do not distinguish between plant-based and traditional animal-based products, making it difficult to identify fast-changing trends with this data alone.

Other sources indicate an ongoing shift in consumer preferences towards plant-based alternatives. For example, the Good Food Institute’s analysis of 2022 SPINS data[1] indicates that the total value of plant-based sales at grocery stores increased by 7% year-over-year and a whopping 44% over three years.

This same data finds that plant-based milk accounts for about 15% of the total milk market in 2022, with 41% of households purchasing some type of plant-based milk throughout the year. Meanwhile, almost one in five households purchased plant-based meat in 2022. Notably, 93% of households that purchased plant-based meat that year also bought animal-based meat, indicating that consumers are introducing meatless alternatives to their diet gradually and may not be ready to go totally vegan yet, which is a much smaller market.

Trends in Capital Expenditures for Alternative Proteins and Plant-Based Foods

So, are these consumer trends impacting industry investing?  In the last ten years, over $3.2 billion of capital investments[2] in these categories have been made in the United States. The plant-based category has by far the greatest dollar value of investment, topping $2.7 billion in the US.

Plant-based dairy products such as milk, yogurt, and cheese have attracted nearly $470 million in capital investment within the US in recent years. 2021 was the strongest year, with over $1.3 billion in the US across 21 separate projects.

The “other plant-based” category accounts for the most capital expenditure (capex), at $1.2 billion. This includes products such as snacks, energy drinks, protein powders, sauces, and more. This is closely followed by plant-based meat, which has garnered over $1 billion in investment during the last decade in the United States. This includes companies such as Impossible Foods and Beyond Meat, which produce meat-analog products out of plant-based materials.

Plant-based foods have generated the most investment in the last decade among the alternative protein categories, enjoying the longest and most consistent investment attraction among these categories in the US since 2018. However, other product segments have been quickly gaining momentum in recent years.

Cultured meat has attracted investments of nearly $250 million in 2022 and 2023 alone. This is an animal-based meat that is cultivated from real animal cells and grown in labs, rather than harvested from a slaughtered animal. Therefore, it is a slaughter-free protein, but not vegetarian.

Geographically, four of the top five states for investment attraction are located in the Midwest. California and other Southern states also account for significant investment attraction in the last decade. Indiana has attracted the most money, with $413 million of investments since 2014, while California has attracted investment across the most projects — nine — for over $285 million in capex.

Globally, the US is the hub for investment in alternative protein and plant-based food production. In the last decade, 45% of all global capex have been directed at projects in the US. The countries with the next-highest total capex in these categories are the Netherlands, Canada, and China, which account for a combined 25% of total global capex in alternative proteins and plant-based foods.

The US also has a higher average capex per project, at $59.3 million on average per project compared to $42.7 million on average for the next five countries combined.

Capital Funding for Alternative Proteins and Plant-Based Foods Startups

Venture capital (VC) transactions indicate that alternative proteins and plant-based foods is a fast-moving, high-growth industry.

In the last decade, over $4.5 billion in VC funding has been raised by US-based startups in plant-based foods and alternative proteins, nearly $3 billion of which was raised during 2019-2021 alone. And unlike the capital expenditures data above, these investments were well underway at the start of the decade. This data suggests that the startup activity was primarily focused on building the industry in the early half of the decade, and that consumer markets grew sufficiently large to support market expansion in more recent years.

Notably, California accounts for almost 82% of the total VC funding raised in the last decade, with $3.7 million of total money raised across 50 startups.

The top three companies that have raised the most VC[3], Impossible Foods, UPSIDE Foods, and Ripple Foods, are headquartered in California close to funders, technology, and innovative universities but also within reasonable proximity regions where crops commonly used in plant-based food products are grown.

The base ingredients in plant-based foods and alternative proteins are commonly soy, chickpeas, wheat, lentils, peas, and potatoes. Those crops are primarily grown and harvested in the Midwest and Pacific Northwest. For example, 67% of US chickpea crops are produced in Washington and Montana,[4] and 27% of soybeans are produced in Iowa and Illinois.[5]  Midwest states like Minnesota, Ohio, Missouri, Illinois, Michigan, and Nebraska also top the list as states with significant venture capital funding in the plant-based category since 2014.

Recent Major Investments in Alternative Proteins and Plant-Based Foods

Key highlights in recent US investments in the plant-based and alternative protein sector include:

• In January 2024, Nature’s Bakery, a subsidiary of Mars, announced a $237 million investment in opening a new baking facility in Salt Lake City for its plant-based snack foods. This one project equals total cross-border investments in the sector in 2023.
• In October 2023, France-based Umiami announced it will open a new US headquarters in Chicago, Illinois, to serve the US Market. Umiami is a plant-based meat food tech startup.
• In September 2023, California-based Upside Foods announced it is investing more than $140 million to construct a new plant in Glenview, Illinois, where it will produce cell-based cultivated ground chicken products. The company plans to expand production to other types of meat at this plant in the future.

Conclusions

Alternative protein and plant-based products have been driving new, large investments in the past ten years, despite a global pandemic and supply chain shortages across the nation.

Investing in food tech is a way to provide stable food options as the environment and economy change.

There are implications to this developing market which can potentially disrupt meat and dairy producers, but it also provides opportunities for economic growth and sustainability.

Disruptions

Two primary disruptions that can impact meat producers based on available market share are innovations in cultured meat and increasing access to plant-based alternatives.

Cultured meat competing for market share: If cultured meats become more cost-effective this might impact cattle and poultry producers because this increases accessibility and the competition for market share. Cultured meat can compete for market share similarly to real beef and chicken because it is not a vegetarian alternative, so it does not have as many replacement challenges like taste, texture, and overall experience when cooking.

Increasing market penetration of plant-based alternatives: Since 93% of households that purchase alternative proteins are omnivore households, this can disrupt the traditional meat producer market because non-vegans are consuming these products as well.

With growing investment and technological advances to change the type and quality of plant-based meats, there is a possibility that the market might shift away from historical consumption levels of traditional meat towards alternative proteins and plant-based products. This can have lasting negative implications on meat producers but offers new potential for agricultural producers to boost crops like soybeans, lentils, and chickpeas.

Opportunities

There are also multiple opportunities for growth like leveraging existing and growing food tech hubs, investing and upskilling the workforce, and innovating for affordability, accessibility, and sustainability.

Leveraging existing food tech hubs: The US is a leading powerhouse in alternative protein and plant-based investment, and this is an opportunity to leverage existing food tech hubs in the Midwest and California and grow the industry.

Economic developers can do this by supporting companies seeking to export value-added products domestically and overseas and by attracting businesses within this food sector’s supply chain to mitigate supply chain disruptions.

Changing workforce: While large investments are being made in food tech, there is an opportunity to train and upskill the workforce to support this growing industry. Food tech offers higher-paying jobs and needs a skilled workforce for long-term success in continued innovation and growth. Partnering with businesses and education institutions to better understand what the industry needs for success is a priority opportunity that communities can start working on now.

Innovating for affordable plant-based products and alternative proteins: One of the biggest challenges for plant-based foods and alternative proteins is the availability and cost of the product. This is primarily caused by to ingredient shortages and supply chain distributions due to distance, labor shortages, and global events (e.g., war in Ukraine, COVID-19, etc.).[6]

As additional capital investments are being made within this industry, there is the potential to create innovative processes that lower the cost of plant-based products and increase accessibility for all. This also directly relates to creating and using food tech in agriculture production to increase crop yields and better support the supply chain within the US (e.g., precision farming).

Sustainable product development and limiting waste: Beyond investment in alternative proteins and plant-based foods, there is a wider opportunity in the Food Sector to bridge gaps in product development with recycled products and with other adjacent industries. For example, Maine-based Marin Skincare uses lobster by-products that are typically discarded by the seafood processing industry as the key ingredient in its products. While Marin’s products are not vegan, data indicates that most households that purchase plant-based products (93%) across the US purchase both animal-based and plant-based goods.

Sustainability is likely to play a key role consumers’ purchasing decisions in the coming years, and companies’ ingenuity in promoting sustainable practices and limiting waste in food processing may help producers mitigate disruptions seen by other products perceived as more sustainable, like plant-based foods.

Learn more about Camoin Associates’ Industry Analytics and STRATEGY services

Related Article:

Growth, Change Creates Opportunities in Food Manufacturing and Processing

[1] https://gfi.org/marketresearch/

[2] The fDi Markets database measures all cross-border investments that occur globally. This includes any capital investments occurring across state or country borders. However, this data does not capture any capital investment being made within the same state of a company’s headquarters.

[3] Venture Capital funding data is available for reported transactions only. Reporting is not required, and therefore not all transactions are included in this dataset.

[4] https://www.agmrc.org/commodities-products/vegetables/chickpeas

[5] https://ipad.fas.usda.gov/rssiws/al/crop_production_maps/US/USA_Soybean.png

[6]  https://gfi.org/marketresearch/

This article originally appeared in the March/April 2024 issue of Expansion Solutions Magazine.

The Aerospace and Defense industry has been getting a lot of attention in the news recently. Top stories include exciting innovations in autonomous technology, space exploration, defense needs related to new and continuing global conflicts, and clean technology including advances in power sources and fuels. There has also been coverage of topics of concern within the industry, including recent high-profile equipment malfunctions and security failures.

This attention will likely continue as Aerospace and Defense is a critical industry not only for our economy but also for national security, business and leisure travel, space exploration and development, and our continued advancement of new technologies serving multiple industry sectors.

Aerospace and Defense is comprised of many core industries within aircraft manufacturing, including guided missiles, space vehicles, explosives, ammunition, and arms, military vehicles, and all their related parts and systems. There are also a number of related industries within the supply chain such as metals, plastics, composites, electronics, information technology, and professional and technical services including engineering and R&D.

In this article, we will focus on a core subset of industries considered part of or connected to Aerospace and Defense, their economic performance, and what is driving economic opportunities and investment. The supply chain for Aerospace and Defense is expansive and therefore creates multiple opportunities across many sectors and subsectors. A detailed listing of the specific industries and the associated North American Industry Classification Codes (NAICS) is included at the end of this article.

Economic Performance by the Numbers

The Aerospace Industries Association has represented the industry since 1919. It provides an annual economic assessment of the industry[1] which highlights the significant positive contributions year after year, including:

• Economic output representing 1.65% of the total US GDP in 2022
• High wages
• High exports with a positive trade balance (exports are higher than imports)
• Sales and purchases across a large supply chain
• High levels of innovation

Digging deeper into recent data from multiple sources supports this assessment of the industry. In 2022, Aerospace and Defense revenues were estimated at $373 billion in the US, a substantial increase over the 2017 level of $335 billion and an indication of recovery from the declines experienced in 2019 and 2020 driven by COVID-19 and supply chain constraints.

IBISWorld projects this revenue turnaround will continue and estimates that Aerospace and Defense revenues will reach $439 billion by 2027. Within the industry group, Aircraft, Engine, and Parts Manufacturing represent by far the largest source of revenues, an estimated $300 billion in 2022.

Supporting strong output and economic benefit, Aerospace and Defense is a “high-value” industry, meaning its revenues are significantly higher than the cost of the goods and services it uses in production. Aerospace and Defense’s value[2] add in 2022 was estimated at $97 billion and is projected to reach $115 billion by 2027.

In terms of employment, Aerospace and Defense had an estimated 574,271 jobs in 2002 with 71% specifically related to aircraft and related parts. Another 17% of jobs are within Guided Missile and Space Manufacturing and related parts.

Earnings and related wages per job are relatively high in Aerospace and Defense, averaging $135,222/year in 2022.

The top occupations in Aerospace and Defense are a mix of production (CNC and other machining, tooling, and metal working), engineers, computer software, and supervisors and managers requiring either degrees or moderate on the job training.

Increasingly, industry employers report needing more employees with skills in IT, problem-solving, communications, the ability to work in teams, and the ability to work with integrated technology including robotics.

Aerospace and Defense is both a high exporter and importer of goods and services. According to IBISWorld, exports in 2022 totaled approximately $23 billion, representing 6% of revenues for all industries in the US. That same year imports totaled approximately $54 billion, resulting in a trade deficit of $31 billion. Federal efforts to produce more goods and services in the US and through onshoring efforts will help stabilize this trade deficit, however imports will likely remain high to meet industry needs within global supply chains and markets. It is worth noting that non-defense activity in Aerospace is typically high in exports and contributes positively to the US trade balance.

Canada and Mexico are the largest recipients of Aerospace and Defense exports, each accounting for 10% or more of the industry group’s 2022 exports. China and Canada are the main sources of the industry group’s imports, supplying 16% and 11%, respectively, of total imports.

Raytheon Technologies is the largest Aerospace and Defense company in the US, with a market share of 10.3% in 2022. The next largest by market share are Boeing Company and GE Aviation UK, with 8.4% and 5.5%.  Other significant players include Lockheed Martin Corporation (4.7%) and General Dynamics Corporation (1.3%).

Data on total jobs and job concentration reveal Aerospace and Defense hubs in major metropolitan areas, many of which feature significant airport facilities or proximity to multiple facilities. This includes Seattle, WA, Los Angeles, CA, Dallas, TX, and Hartford, CT.

Smaller metropolitan areas can have a larger job concentration relative to total jobs in all sections, and the most concentrated include Camden, AK, Wichita, KS, Ozark, AL, Cedartown, GA, and Milledgeville, GA.

Factors Driving Trends and Opportunities

There are numerous factors that impact and drive economic development trends and opportunities in Aerospace and Defense. The following is an overview of the more critical factors related to recent and emerging activities.

Innovation, Entrepreneurship, and Technology

Innovation and entrepreneurship are driving growth in existing and emerging regional hubs. This includes growth of test sites, R&D, technology, and commercialization.

Test sites for Unmanned Aircraft Systems (UAS) are seeing significant growth and investment. The Federal Aviation Administration (FAA) has seven UAS test sites across the country that are generating emerging industry activity.

In addition to the FAA test site locations, innovation related to Aerospace and UAS is also emerging in other regions.

GENIUS NY is a startup accelerator in Syracuse sponsored by Empire State Development, which invests $3 million annually into seed-stage startups focused on uncrewed aerial systems, automation, and artificial intelligence (AI)[3].  It is located near Griffiss International Airport at the Griffiss Business Technology Park in Rome, NY, and is operated by Oneida County. This is creating a targeted growth corridor from Rome to Syracuse.

Detroit’s Advanced Aerial Innovation Region is a recent entrant into UAS and drone hub development. A partnership between Ford affiliate Michigan Central and the Michigan Department of Transportation, it is the first cross-sector, advanced aerial urban initiative in the US. It seeks to attract drone company startups, provide high-skill job training, and advance public policy related to the commercialization of drone technology in the state[4].

The AeroPark Innovation District located at and adjacent to St Mary’s County Airport in Maryland is also a recent entrant hoping to create a hub of Aerospace and Defense activity. It encompasses the University of Maryland UAS Test Site; TechPort business accelerator; aviation and aeronautic companies including PaxAero, Solutions, ABSI Aerospace & Defense, MTECH, and AIRtec; and the Wildewood Professional and Technology Park and retail areas.

The Tulsa Hub for Equitable & Trustworthy Autonomy (THETA) in Oklahoma was recently designated as one of 31 Tech Hubs to receive federal funding from the US Department of Commerce’s Economic Development Administration. THETA will focus on unmanned aerial systems, drones, cybersecurity, and generative artificial intelligence and is an excellent example of the importance of regional collaboration for success in Aerospace and Defense. Led by Tulsa Innovation Labs, the partnership includes Tulsa Regional Chamber of Commerce, University of Oklahoma, Oklahoma State University, Tulsa Community College, Oklahoma Aeronautics Commission, and many more.

The Los Angeles region has long been an area dense with Aerospace activity and is seeing considerable investment as a hub for emerging technologies and commercialization. Among the coordinating partners from an economic development perspective is the SoCal Aerospace Council.

The council’s purpose is to build and sustain the most globally competitive Aerospace and Defense cluster. This effort is building on and succeeding in growth with involvement from multiple top companies, including Relativity Space, SpaceX, Rocket Lab, and many more.

In almost all cases, innovation advances in Aerospace and Defense are being led by or are occurring parallel to advances in information and digital technologies. Examples include:

• Increased use of data and analytics that supports modeling-based systems for design, engineering, and throughout production and other ongoing processes.
• Sensors, monitoring, digital twins, and blockchain that support production and supply chain monitoring, efficiency, and safety.
• AI-supported predictive maintenance that provides the ability to forecast equipment failure.
• Virtual and augmented reality that supports training as well as maintenance and repairs.

This increased use of data and information technologies within Aerospace and Defense is also simultaneously increasing the necessity and demand for enhanced cybersecurity.

Another major area of innovation and technology is cleantech, which uses technology to reduce carbon emissions and depletion of natural resources, increase the use of renewable energy and materials, and help companies improve efficiency by requiring less energy or materials. For Aerospace and Defense, this includes integration of cleaner fuels (biofuels), advanced materials (lighter stronger, sources from cleaner raw materials such as bioplastics), electrification, R&D, and commercialization of hydrogen technologies.

Cleantech is being integrated within the Aerospace and Defense industry in response to global consumer trends and demand, which are driving new regulations, policies, and incentives, and as a way to reduce costs and improve performance. According to IBISWorld, “Concerns about sustainability and the industry’s reliance on fossil fuels have driven demand for electricity-based solutions to air travel that are more environmentally friendly. Viable electric models have already gone airborne with the help of lightweight body and engine compositions, though some look to hydrogen planes as a more practical solution. While electric cars are a modern reality, battery limitations and a lack of regulatory frameworks have dramatically slowed the technology’s adoption in air travel. To address this, manufacturers will continue partnering with electric vehicle companies and invest heavily in exploring electric propulsion technology.”

Federal Spending and Initiatives

Federal spending by the US Department of Defense (DOD) plays a significant role in the demand for the Aerospace and Defense products and services. In the past ten years, DOD budgets have grown substantially, increasing from $560 billion in 2015 to $842 billion in 2024.

Source and Notes: Defense Budget Overview, United States Department of Defense, Fiscal Year 2024 Budget Request; Includes Global War on Terror/Overseas Contingency Operations and other supplemental funding including funding for Ukraine.

This increase in US defense spending is consistent with global trends. According to ResearchAndMarkets.com, which released a 2023 report on the global Aerospace and Defense market, “The defense industrial base across US [and] Europe is gearing up to ramp-up production rates over near term to refill depleting stockpiles of munitions, missiles, [and] weapons following the rapid rate at which they are being used in Ukraine and to meet growing international orders. The global defense spending, thus, is projected to reach the record $2.5 trillion level by 2027 as the industry prepares to ramp up production rates to unprecedented rates [and] level over near to medium term to meet huge global demand, replenish depleted inventory levels and develop next generation capabilities with significant investments underway towards R&D as well.”

In addition to DOD spending, US government spending has long played a role in the trajectory of the Aerospace and Defense sector. In addition to the typical annual budget allocations, this has been especially true in the last three years, as there have been numerous blockbuster government spending bills aimed at transforming the nation’s infrastructure, energy, and manufacturing sectors.

Three pieces of legislation that will have a notable impact on Aerospace and Defense industries include the Infrastructure Investment and Jobs Act (passed in November 2021), the CHIPS and Science Act (passed in August 2022), and the Inflation Reduction Act (passed in August 2022). Much of the federal investment is driven by the desire to ramp up manufacturing within the US, to accelerate the application of AI and other digitals technologies, and to fast track the research and application of sustainable fuels and practices that will make the industry more resilient and lessen its impact on the environment.

The federal government set a goal to reach net-zero greenhouse gas emissions in the US aviation sector by 2050[5] and pieces of the Inflation Reduction Act seek to incentivize this transition and mitigate industry’s impact on climate change. This includes grants that encourage the use of sustainable aviation fuels (SAF) and low-emission technology.

The Fueling Aviation’s Sustainable Transition (FAST) grant program will award a total of $244.5 million to a range of users in the industry. Private sector companies can apply for the funds, along with other stakeholders like airports, air carriers, universities, local governments, and nonprofits.[6] The latest round of applications is currently being reviewed and additional funding is set aside in the coming years.

The Infrastructure Investment and jobs Act (IIJA) stands as one of the nation’s largest investments in infrastructure. It includes $25 billion in funding for aviation-related items like airports and air traffic control. These investments are severely overdue according to the American Society of Civil Engineers (ASCE), an industry group that gave US aviation infrastructure a D+ rating in their 2021 Report Card for America’s Infrastructure.[7]

The objective of the CHIPS and Science Act is to incentivize the production and innovation of semiconductor chips across the US. These chips are prevalent in the aerospace industry and the availability to secure them is critical to the stability of both the commercial and defense side of the industry. The CHIPS Program Office notes that while there is no fixed amount for awards, they anticipate their investments to range between 5-15% of the applicant project’s total capital expenses. The first Notice of Funding Opportunity was released in February 2023 and there were several waves of funding for different parts of the industry.

Applicants are asked to demonstrate their level of commitment to the project, which is judged based on the level of coordination with other local and state incentives, the amount of private capital leveraged compared to the grant ask, and the status of site evaluation if the project is construction focused.[8]

Additional funding opportunities will be available in the coming years around the production, construction, workforce, and research and development.

At the end of 2023, the federal government awarded the very first CHIPS and Science Act grant to BAE Systems, based in New Hampshire. The Aerospace and Defense government contractor received a $35 million grant to quadruple its semiconductor production capabilities. The US Commerce Department says that it expects to roll out around $53 billion in CHIPS and Science Act grants.[9]

Commercial Aircraft

Commercial aircraft, engines, and parts are a major part of all Aerospace and Defense activity. They are primarily driven by consumer demand which can be measured by enplanements. Impacted significantly by COVID-19, air travel has since rebounded. According to the US Department of Transportation, Bureau of Transportation Statistics, based on October seasonally adjusted data:

• Systemwide enplanements (81 million) reached a new all-time high based on data through October 2023.
• Domestic enplanements (70.1 million) were down 1.2% from the all-time high of 70.9 million reached in January 2020.
• International enplanements (10.89 million) reached a new all-time high based on data through October 2023.

On recent and future demand, IBISWorld reported in 2023: “Despite a collapse of demand for air travel and new airplanes amid the COVID-19 pandemic, the pent-up demand in its aftermath brought a surge of air transit that boosted revenue as airlines sought replacements for planes and plane parts.”[10]

However, IBISWorld also indicated this demand was somewhat muted: “Climbing inflation has led to plummeting consumer confidence, discouraging travel. This trend has rippled through consumer aerospace markets, counteracting post-pandemic growth.”[11]

Consumer sentiment has also been impacted by safety concerns and service disruptions that have gained significant media attention. According to IBISWorld: “Commercial air transit represents the largest revenue stream, so steadily improving consumer sentiment will drive growth. Domestic and international trips by US residents will reliably and notably climb over the next five years, representing a continued interest in travel following the still-lingering pandemic lockdowns.”[12]

Supply Chains

In addition to negatively impacting air travel, COVID-19 also directly impacted Aerospace and Defense supply chains. The impact was significant, and the recovery was slow. Supply chains have also been impacted by the reduced availability of computer chips and critical minerals and continued threats and disruptions from global conflicts. Additional computer chip capacity is being added within the US through the federal funding programs mentioned earlier in this article but is not yet online.

In addition to building physical capacity, technology is increasingly being deployed to make supply chains more efficient, responsive, and resilient. According to an article published by Deloitte Research Center for Energy & Industrials: “The A&D supply chain is a complex, globalized ecosystem of customers and original equipment manufacturers; multiple tiers of suppliers; and maintenance, repair, and overhaul providers. This complexity makes implementing diversification and transparency across the value chain extremely difficult, but imperative.[13]”

This is where technology is increasingly coming into play. The Internet of Things (IOT), as well as sensors, blockchain, and AI are all being piloted and integrated into supply chain applications. Adaptive manufacturing (3D Printing) also provides the ability to some make parts and materials on site, reducing the need for warehousing and transporting.

According to an article on Aerospace and Defense technology trends published recently by Epicflow: “The main advantage of additive manufacturing for the aerospace sector is that it improves manufacturing efficiency (thanks to rapid prototype development) and makes it possible to produce more lightweight components for aircraft, spacecraft, and satellites. This is especially relevant in the context of post-pandemic production ramp-ups in the aerospace realm; the technology makes it possible to reduce production costs, optimize fuel consumption, and generally gives aerospace manufacturers a competitive advantage.”[14]

Workforce

Aerospace and Defense industry employers require a workforce with traditional advanced manufacturing skills in production, engineering, and related field, but are increasingly seeking workers with IT/digital skills. Furthermore, due to rapid changes in technology, no one can be expected to learn and be skilled at both what is needed and applicable in today’s industry as well as what might be required five years into the future and beyond without the strong commitment of industry, companies, and the education and workforce system for providing workers with continuous and adaptive learning.

This is all occurring in the midst of workforce shortages and competition for workers across all industries which is unlikely to subside in the mid-to long term future given the retiring population and demographics of the population in the US.

Companies and industries will need to significantly increase opportunities for training and education through partnerships with government and academia. This will need to be coupled with increasing the flexibility of traditional shiftwork, compensation and benefit increases, and providing a supportive work environment that meets workers needs within the region and localities where work is done in the form of housing, family care, and transportation.

Key Takeaways for Economic and Business Developers

The economic trends and opportunities presented in this article affect Aerospace and Defense companies all the way from start-ups to large global companies. Economic and business developers seeking to support these companies or attract new companies and investment will benefit from a focus on strategies and actions within three key areas.

Support Workforce Development: While support to retain and attract workers exists across numerous occupations and skill areas the most critical for Aerospace and Defense are those within manufacturing and production, engineering, and information technology. Successful workforce development efforts will require close collaboration between industry, education, and workforce partners. The focus should be on providing continuous training and the modernization of skills to include critical thinking, problem solving, and communications alongside technology. Supporting and partnering with high school career and technical centers as well as community colleges can have the most immediate impact.

Focus Marketing Efforts on Attraction and Investment: Aerospace and Defense require specific methods and data for marketing and business attraction. It is important to understand foreign and domestic trade and supply chains to be able to align with your niche and assets, including R&D, workforce, and location.

Specific Aerospace and Defense trade shows and conferences to consider attending for business and economic development include:

• AeroDef Manufacturing: Held every two years and produced by SME in partnership with industry OEMs, its mission is to foster innovation across the extended enterprise to reduce costs, expedite production times and maintain manufacturing competitiveness in the global economy. The show is collocated with WESTEC, a manufacturing technology show.
• Farnborough International Airshow: A trade exhibition for the aerospace and defense industries where civilian and military aircraft are demonstrated to potential customers and investors.
• International Paris Air Show: An international aviation and aerospace exhibition, which is organized every two years and is the oldest and largest air show in the world.
• AUVSI XPONENTIAL: The Association for Uncrewed Vehicle Systems International’s tech conference, it is dedicated to unmanned systems and robotics.
• Military Robotics and Autonomous Systems USA: This conference is dedicated to military robotics in the land environment and brings together leading US and international programs managers, robotics experts and industry to discuss role of military robots in modern warfare.
• UAV Technology: This leading international forum is focused on the development of uncrewed aerial systems for military, industry, and academia.

Foster Regional and Cross-Sector Partnerships: The footprint of Aerospace and Defense industry typically spans multiple states or regions and involves a variety of sectors within the value and supply chains. No one region can compete alone and no one organization can provide all the effort and services needed to succeed. Help develop and sustain collaborative relationships with the organizations, companies, schools, and agencies in your community.

Related Article: The Space Economy: Legacy Industries and Emerging Trends

Learn more about Camoin Associates’ Industry Analytics and STRATEGY services

[1] “Supporting the Economy: At-a-Glance,” Aerospace Industries Association, https://www.aia-aerospace.org/industry-impact/#supporting-the-economy.

[2] Industry Value Added (IVA): The market value of goods and services produced by the industry minus the cost of goods and services used in production. IVA is also described as the industry’s contribution to GDP, or profit plus wages and depreciation.

[3] “About GENIUS NY,” GENIUS NY website, https://geniusny.com/about/.

[4] “Michigan Central, MDOT Launch Advanced Aerial Innovation Region in Detroit to Accelerate Commercial Drone Development” news release, Michigan Department of Transportation, October 25, 2023, https://www.michigan.gov/mdot/news-outreach/pressreleases/2023/10/25/mi-central-mdot-launch-advanced-aerial-innovation-region-in-det-to-accelerate-commercial-drone-dev.

[5] “US Sets Goal of Net-Zero Aviation Emission by 2050,” Reuters, November 9, 2021, https://www.reuters.com/business/cop/us-sets-goal-net-zero-aviation-emissions-by-2050-2021-11-09/.

[6] “Fueling Aviation’s Sustainable Transition (FAST) Grants,” Federal Aviation Administration online, December 4, 2023, https://www.faa.gov/general/fueling-aviations-sustainable-transition-fast-grants.

[7] “2021 Report Card for America’s Infrastructure: Aviation,” American Society of Civil Engineers, https://infrastructurereportcard.org/cat-item/aviation-infrastructure/.

[8] “Your Guide to the CHIPS Act Application,” BDO USA, April 12, 2023, https://www.bdo.com/insights/industries/manufacturing/your-guide-to-the-chips-act-application.

[9] “Biden-Harris Administration and BAE Systems, Inc., Announce CHIPS Preliminary Terms to Support Critical US National Security Project in Nashua, New Hampshire,” US Department of Commerce press release, December 11, 2023, https://www.commerce.gov/news/press-releases/2023/12/biden-harris-administration-and-bae-systems-inc-announce-chips.

[10] “Aircraft, Engine & Parts Manufacturing in the US – Market Size, Industry Analysis, Trends and Forecasts (2025-2029)”, IBISWorld, November 2023, https://www.ibisworld.com/united-states/market-research-reports/aircraft-engine-parts-manufacturing-industry/.

[11] Ibid.

[12] Ibid.

[13] Lindsey Berckman, Tarun Dronamraju, Kate Hardin, and Matt Sloane, “2024 Aerospace and Defense Industry Outlook,” Deloitte Research Center for Energy & Industrials,

https://www2.deloitte.com/us/en/insights/industry/aerospace-defense/aerospace-and-defense-industry-outlook.html.

[14] Victoria Sokolova, “Driving Digital Transformation in Aerospace & Defense: Technology Trends in 2024,” Epicflow, January 3, 2024, https://www.epicflow.com/blog/driving-digital-transformation-in-aerospace-defense-recent-technology-trends/.

This article originally appeared in the January/February 2024 issue of Expansion Solutions Magazine.

The Medical Device industry stands at the forefront of innovation, catalyzing groundbreaking advancements that redefine how and where people access everyday medical care. The industry is experiencing an unprecedented surge of excitement and transformative developments. From state-of-the-art diagnostic tools to revolutionary therapeutic devices, the Medical Device sector is not only meeting the evolving needs of healthcare but also shaping the future of medicine.

In recent years, the confluence of cutting-edge technologies, regulatory support, and a growing demand for personalized healthcare have propelled the industry into an era of exciting opportunities. The intersection of artificial intelligence, robotics, and precision medicine has given rise to a new generation of medical devices that not only enhance the efficiency of diagnostics and treatment but also pave the way for more targeted and patient-centric approaches.

And yet, the last three years have proven to be rocky for the Health Care sector, as operators attempt to recalibrate and stabilize from the economic fallout of the pandemic. In this comprehensive analysis of the Medical Device industry, we will explore its recovery in terms of investment; imports/exports; where activity is concentrated in the US; and what innovations are propelling growth in an industry where each advancement brings us closer to a future where healthcare is not just reactive but predictive, personalized, and profoundly impactful.

Medical Device Industry Overview

For this article, the Medical Device industry is defined by seven NAICS codes, as noted in the chart below. The Medical Device industry includes sectors that crossover with Advanced Manufacturing, which makes hardware that typically integrates electronics for use in medical devices.

Medical devices are typically used in hospitals, doctor offices, nursing and residential care facilities, and diagnostic labs.

The last five years were marked by slow growth in the Medical Device industry, resulting from COVID-19 impacts as well as supply chain issues. Today, the industry has experienced a resurgence and is poised for higher levels of growth and opportunities. Revenue growth in the US is projected to increase at a compound annual rate of 2.5%, which will be accompanied by increases in value-added production and exports.

One factor driving growth is the continued aging of the population, leading to an increase in demand for specialized medical procedures and care. Additionally, innovative technology is creating novel applications for medical devices. Some of the emerging uses within the medical device field include the ability to personalize medical diagnostics and care to meet individual patient needs and conditions, as well as advanced sensing and monitoring that make applications more effective and safer for patients to use.

Medical Device Exports and Imports

With improvements in the supply chain following the pandemic, exports of medical devices have increased in the last two years, reaching $13.9 billion, and they are projected to increase to about $16.6 billion by 2027. The US exports most of the medical devices it manufactures to China, Japan, the Netherlands, and Germany.

It is expected that medical device imports will continue to exceed exports through 2027, although at relatively stable levels over the next five years. The US imports the greatest quantities of medical devices from Germany and Mexico.

Venture Capital and Capital Investments in Medical Devices

The pandemic also took a toll on venture and capital investment. Medical device startups raised $8.8 billion (USD) in venture capital in 2023, falling nearly 62% since 2020.[1] The industries that are most associated with startups receiving venture capital funding for medical devices are Health Care, Biotechnology, Health Diagnostics, Manufacturing, and Artificial Intelligence.

In the last three years, capital investment in the Medical Device sector has been on a downward trend, falling from $1.6 billion in 2021 to $535.7 million in 2023.[2] Since October 2020, 153 deals have been made in the US Medical Device sector, totaling over $4.5 billion in capital investment and creating an estimated 17,000 jobs. A vast majority of that investment represented domestic deals, meaning investment flowing between US states. 80 investment deals ($3.1 billion) came from within the US, while Malaysia ($350 million), Japan ($312 million), Switzerland ($179 million), and the United Kingdom ($158 million) were foreign countries with major capital investments in the US for medical devices.

The projected recovery and growth of the industry are likely to increase venture and capital investment, however, rising industry costs will remain a concern for investors. While there was already upward pressure on the inputs into the industry, the pandemic exacerbated this trend, cutting industry profits and driving up prices for end users. Intense rounds of research and development and clinical trials also drive up the cost of many medical devices. However, investors are generally cautious and want to see measurable results before making large investments.

Another factor that will influence investments in the Medical Device industry includes the recent US legislation, specifically the Inflation Reduction ACT (IRA) which sets new guidelines for medical devices as well as other components of the healthcare system (Hogan).

The Landscape of Occupations in the Medical Device Industry

The Medical Device industry contains a mix of employment that is representative of highly technical occupations (engineering, computer scientists) that require higher education degrees, but also include manufacturing specialists (machinists and technicians) that require associate degrees and/or post-high school technical certifications and on-the-job training.

The Geography of Medical Device Employment in the US

Based on 2022 employment figures, Minnesota has the highest concentration of jobs in the Medical Device industry, followed by Massachusetts, Delaware, Utah, California, Rhode Island, and Vermont. The top 25 states by employment concentration are noted in the table.

Recent developments reflect Minnesota’s leadership in medical device activity. This past October, the Minneapolis-Saint Paul Economic Development Partnership was designated one of the inaugural Tech Hubs by the US Department of Commerce. The Partnership’s proposal, Minnesota MedTech 3.0, aims to position Minnesota as a global center for “Smart MedTech.”

The recent opening of Ascential Technologies in Blaine, Minnesota, showcases the cross-over between life sciences manufacturing within the state. The company opened a 100,000-square-foot factory that focuses on custom automation for medical device manufacturers and employs 150 people. The facility is part of Ascential’s commitment to innovation, community development, and enabling businesses to repatriate manufacturing capabilities, supporting the resurgence of American manufacturing. Ascential’s customer base includes 3M, Medtronic, Abbott, and Boston Scientific[3].

Additional activity in Minnesota this year includes Zeus, a global leader in advanced polymer solutions, which celebrated its grand opening of a new catheter manufacturing facility in Arden Hills, Minnesota. The 75,600-square-foot building will house CathX Medical, acquired by Zeus in 2021. The facility includes an advanced research and development lab and cleanroom equipped with the latest technologies to design, develop, and validate new medical catheter prototypes. It also brings additional capabilities in-house to Zeus, including laser cutting, ablation, and welding”[4]. The Arden Hills location was chosen for its easy access to local transportation and amenities for the company’s expanding workforce.

Another state on the list, New Hampshire, is also making a name for itself as a tech hub and advancing an array of medical device manufacturing. The Advanced Regenerative Manufacturing Institute (ARMI) was designated as the “ReGen Valley Tech Hub” and aims to invest in manufacturing facilitates and incubate technology startups to further build the emerging field of regenerative therapy development and biofabrication.

Noteworthy developments in the Medical Device industry extend beyond the states that have high existing concentrations, as well. In the summer of 2023, Paragon Medical opened a $16 million additive manufacturing facility in Pierceton, Indiana, which specializes in the 3D printing of medical devices. The facility is expected to create 15 jobs and reduce lead time, costs, and supply chain complexity across the Medical Device industry. Paragon plans to invest an additional $19 million over the next five years[5].

In Michigan, the Lansing Economic Area Partnership (LEAP) continues to support its MedTech cluster and recently completed its 2023 Ascend MedTech Accelerator program. The program brought innovative companies with medical devices and other healthcare innovations to the Lansing region to further their research and commercialization phases. It was also an opportunity for the companies to work directly with the region’s large healthcare system, Sparrow Health System, and discover the real-world applications of their medical device or product.

Technology Trends in Medical Device Manufacturing

The future of the Medical Device industry is highly tied to the ability of companies to develop wearable devices with related technologies that deliver precise and personalized information using cloud-based data and analytics.[6] The methods of delivering this personalized information differ based on the patient and type of treatment and several examples are documented below.

The Rise of Wearables: Wearable medical devices that are inconspicuous and help treat chronic illnesses, diagnose ailments, or attack infections are a notable segment of this industry. In some cases, the technology is integrated into an already existing product or procedure. This includes items like smart contact lenses, which not only correct vision imperfections but can also distribute medicine to relieve allergies or measure blood sugar levels for people with diabetes.

Research is currently underway for several iterations of an augmented reality lens, which can be used to display real-time information directly on the user’s lens.[7] In some instances, data from wearable medical devices can even be transmitted directly into a user’s electronic records, updating in real time to ensure that medical professionals have the latest information at their fingertips when making decisions about a patient.

Personal Data to Diagnosis: The Medical Device sector is following the wider Health Care industry in the field of precision healthcare, where individualized care or a treatment plan is developed through intelligence collected by digital tools and reported back to clinicians to assist in their decision-making process.

Yet, as data and software tools increasingly shape how medical devices are used by medical professionals, the safety and privacy of this information will be a growing field to watch. The FDA has issued recent guidance for how “clinical decision support” (CDS) software should be used and stored in compliance with HIPPA regulations and even what type of software meets the threshold to be considered CDS.[8]

Drug Delivery Systems: Consistent with precision and personal care is the continued development and application of medical devices for drug delivery systems in individuals. As new drugs continue to be developed and specialized these delivery systems will be increasingly in demand.

Assistive Robotics: The advancement and integration of robotics is also positively impacting medical device innovation and demand. This includes robotics for assisting in surgery as well as patient medical care.

What This Means for Economic Developers

• Medical device manufacturing has become significantly integrated with information technology and analytics. It is therefore critical for regions to assess and develop their IT and analytics talent/workforce. Minnesota and its designation as a tech hub provides an excellent example of this intersection, as its strength in manufacturing runs parallel to its strength in data science and analytics for healthcare including bioinformatics.
• Given the past challenges within the supply chain, which still exist to some extent, those regions that can foster supply chain infrastructure — such as airports, cargo, and crossroads of trains, rail, and ports — are going to be competitive locations for new projects and expansions.
• With the soaring costs faced by industry operators and a history of tight profit margins, economic development organizations that can help companies lower development costs and attract and retain a skilled workforce will provide a competitive advantage.
• Given the specialization and innovation that occurs in the Medical Device industry, it is important for economic and business developers to stay up on current trends. A few places you can go to familiarize yourself with the industry include the Medical Device Manufacturers Association (medicaldevices.org) and the Advanced Medical Technology Association (www.advamed.org).

_________________________________________________________

[1] Through November 2023, Crunchbase

[2] fDi Markets Database, figures reflect totals through October 2023

[3] https://www.assemblymag.com/articles/98156-medical-device-company-opens-minnesota-factory

[4] https://www.zeusinc.com/company/news/zeus-celebrates-grand-opening/

[5] https://www.insideindianabusiness.com/articles/paragon-medical-opens-new-manufacturing-plant

[6] Medical devices 2030, https://kpmg.com/us/en/articles/2023/medical-devices-2030.html

[7] https://www.aao.org/eye-health/tips-prevention/smart-contact-lens-tech-beyond-vision-correction

[8] 202 Life Science and Health Care Horizons, https://brochures.hoganlovells.com/hogan-lovells-lead/ls-hc-horizons-2023?pid=MzA304097&p=2&v=1.1

Learn more about Camoin Associates’ Industry Analytics and Strategies services

Related Articles:

• Trends in Healthcare and an Imperative for a Focus on Workforce Development
• Healthcare Sector Update: Crisis to Opportunity

This article originally appeared in the November/December 2023 issue of Expansion Solutions Magazine.

The food manufacturing sector plays an important role in every economy, providing goods for institutions such as schools and hospitals as well as restaurants and grocery stores for everyday consumers.

There is not a state, region, or locality in the United States where food manufacturing and processing do not have a presence, either directly through a company and associated jobs, or as part of the value chain for the overall food economy, including agriculture, warehousing, and distribution.In this article, we focus on food manufacturing and processing as defined by the North American Industry Classification System (NAICS) 311 . We provide an overview of economic trends in the industry, examine recent issues, and provide insight into business expansion and attraction for regional economic development.

Food Manufacturing Growth is Creating Opportunities

In 2022, there were 1.7 million jobs in food manufacturing across the US, representing just over 1% of all jobs in the nation. Economic output as measured by Gross Regional Product (GRP) in 2022 for food manufacturing was $181 billion, also representing just over 1% of economic output for all industries.

Though a relatively small sector, food manufacturing is growing faster than the economy as a whole. Between 2017 and 2022 food manufacturing jobs grew 6.6% in the US compared to 3.8% for all sectors, with an additional 8% projected growth from 2022-2027, again outpacing the overall economy. Looking at Food Manufacturing subsectors, Animal Slaughtering and Processing and Bakeries/Tortilla manufacturing together accounted for just over 50% of all jobs.Jobs in food manufacturing in the US are most concentrated in the Midwest States as well as Alaska. For example, food manufacturing employment is 3.5 times more concentrated in Nebraska than in the nation overall. Notably, states with high concentrations of food manufacturing also have strong activity in other parts of the food value chain. For example, the Midwestern states have strong concentrations in agriculture, while Alaska’s economy has relatively high shares of employment in fishing. The combination of multiple food sector activities and value chain assets creates an environment for food manufacturing to flourish.Examples of recent investments in these states include:

• Walmart’s twin investments in beef processing, with a minority stake in Sustainable Beef’s $325 million beef processing facility in North Platte, NE , as well as a $257 million beef processing and packaging facility in Olathe, KS, intended to package and distribute products from the North Platte facility
• Pet food manufacturer Royal Canin USA’s (subsidiary of Mars) investment of $185 million into new production lines for its facility in North Sioux City, SD, supported by a $3.95 million Reinvestment Payment Program grant from the Governor’s Office of Economic Development
• Meat products producer Fair Oaks Food’s investment in a $134 million, 154,000-square-foot automated facility to produce fully cooked bacon in Davenport, IA

While critical and growing in importance to the US economy, food manufacturing jobs provide relatively low earnings at about $70,000/year on average, per job, in 2022 compared to $80,000/year for the economy average. While providing entry-level jobs (those that require little to no education or training) is meaningful, these low wages create challenges for attracting and retaining workers in a highly competitive labor environment.

Recent Food Manufacturing Industry Trends

Food manufacturing is being influenced by multiple recent trends and factors including workforce, supply chain, demographics, changing consumer demand, technology, and climate. The following is an overview of three of these and their relationship to the food manufacturing industry.

Infrastructure and Supply Chains

Food manufacturing and processing is one component of a complex system that makes up the food economy. Economic performance and opportunities in food manufacturing depend significantly on costs and prices in each of the other supply and value chain components as well as policies, practices, and market changes. Over the past five years, we have seen multiple factors impact the food supply chain, each creating knock-on impacts for the food manufacturing sector. These include COVID-19; geopolitical events and disruptions such as the war in Ukraine; climate change and major climate events (floods, fires, hurricanes, etc.); labor disruptions including strikes; and more.

Further growth and stability in the sector will continue to require major investment in upkeep, improvements, and expansion of the underlying infrastructure that supports supply chains and logistics, including roads, rails, ports, canals, and airports. This is required to keep supply chains functioning and to create long-term resiliency to external factors.

Consumer Preferences, Demographics, and Diversity

Each of these factors is creating change in the food economy. In the US, the population is becoming more ethnically diverse, which creates new and expanded markets for global ingredients, palettes, and preferences. Meanwhile, Millennials are now the largest generation, creating further change in market preferences.

Other trends such as preferences for convenient food options including grab-n-go, healthy alternatives, plant-based proteins, and local food movements are all creating new opportunities for entrepreneurs and existing companies to satisfy this changing demand.

Technology

Digital technology is transforming all industries including food manufacturing. Ecommerce infrastructure and use are creating new opportunities for food manufacturers, including direct-to-consumer ability. This is particularly beneficial to medium and small food manufacturers.

Additionally, the rise of social media use and channels is further fueling this and allowing companies to build “consumer communities.” Finally, technology in the form of automation and robotics combined with software and sensors is transforming how food is manufactured, tracked, and delivered.

Recommendations and Resources

Based on these recent trends and issues, there are several key takeaways to help economic and business developers grow the local and regional food manufacturing industry.

Support networks and communities of entrepreneurship and innovation specifically within the food economy. Rapid change and technology require new learning and approaches. Larger companies have access to innovation, R&D, and commercialization that small companies are typically lacking. Entrepreneurial networks and related programs and initiatives can provide shared support for capacity building for entrepreneurs seeking to enter the market along with smaller companies already participating in the market.

Provide data analytics and market intelligence to food manufacturing companies and stakeholders within your state or region. There has been a significant increase in data and analytics applicable to the food industry in the past five years. This includes demographic and consumer trends; data on sales, trade, and logistics that provide important intelligence for focusing on new geographic markets; and digital intelligence of marketing, social media, and branding. Again, all of this is commonly accessible to large corporations but typically out of reach for smaller companies and entrepreneurs, though networks and alliances can help aggregate capacity to provide information and related services.

Provide support for small and mid-sized industries in accessing and preparing for trade shows. Trade shows are beneficial both for learning about issues arising within the industry as well as finding new opportunities for penetrating the market through B2B sales and partnerships. The following is a list of some of the prominent trade shows relevant to food manufacturing.

Selected Food Manufacturing and Related Trade Shows

• AFFI-CON (AMERICAN FROZEN FOOD INSTITUTE): Premier business event for frozen food and beverage makers, industry suppliers, and logistical partners
• AMERICAS FOOD & BEVERAGE SHOW & CONFERENCE: The largest food and beverage trade show in the Western Hemisphere, the Americas Food & Beverage Show focuses on increasing trade between food and beverage companies throughout the Americas.
• INTERNATIONAL FOOD & DRINK EVENT: This International Food & Drink Event (IFE) brings together an immersive and interactive event taking place key industry professionals to come and sample the latest products, develop their knowledge on the trends affecting the food and drink sector and network face-to-face with suppliers.
• PROCESS EXPO: This global food equipment and technology show represents the pinnacle of food technology, bringing together the world’s most successful food and beverage processors, packaging professionals, equipment manufacturers, and leaders in the field of academia. Joint venture of the Food Processing Suppliers Association (FPSA), a global trade association serving suppliers in the food and beverage industries, and show partner and manager, Messe Frankfurt.
• IFT (INSTITUE OF FOOD TECHNOLOGISTS) FIRST ANNUAL MEETING & EXPO: This annual event is the place where “science of food” professionals gather to debate and discuss science and new innovations, explore ingredients and technologies for the future, and collaborate on key issues impacting the global food system.
• SUMMER FANCY FOOD SHOW: The largest specialty food industry event in North America. Makers, manufacturers, buyers, brokers, distributors, and other industry professionals from around the globe rely on the Summer Fancy Food Show for product discovery, networking, and business opportunities.
• SWEETS AND SNACKS EXPO: Popularly known as the largest confectionery, sweets, and snacks trade event in North America, this trade show is held annually.

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This article originally appeared in the September/October 2023 issue of Expansion Solutions Magazine.

Like all industries, forestry and lumber-related industries are experiencing significant transitions from global and national issues, including climate and related environmental changes, clean and green technology, demand for housing construction, labor market and demographics impacting workforce, and more. These issues are creating both opportunities and challenges. This article examines recent trends in and impacts on the forestry and lumber-related sectors and offers insights into emerging opportunities.

For the purposes of this article, forestry and lumber industries included in this article include services critical to the industry (timber services, logging, and other support services), Sawmills and Wood Product Production, and Pulp and Paper Manufacturing. A detailed list of these industry sectors is provided at the end of this article.

Industry Overview[1]

Establishments

There were approximately 75,000 establishments in the forestry and lumber sector in 2022. Employment is heavily concentrated in the natural resources segment of the sector, with over 45,000 establishments in the logging industry alone and over 16,000 in the forest support services industry. Meanwhile, the lumber and wood products segment accounted for 10,500 business establishments in 2022.

Overall, the number of establishments in the sector dropped by 9% in the last five years and is projected to contract by another 6% through 2027. These reductions are driven by Wood Product Manufacturing and Logging, which lost a combined 8,700 establishments over the last five years.

Contractions across the board have been heavily influenced by high levels of foreign competition as the appreciating dollar has made exports less competitive. Other downstream impacts, like the declining production of Paper Mills, have had ripple effects throughout the industry.

Employment

Employment in the sector topped 425,000 in 2022, essentially unchanged from five years prior. Major employment reductions in industries like Paper Mills (-15,100) and Logging (-7,900) were offset by gains in Forest Support Services (+8,700), Sawmills and Wood Production (+8,350), and Prefab Home Manufacturing (+6,550).

Despite relatively stable employment numbers over the last five years, employment is expected to decline by 7% over the next five years (-28,500 jobs). Nearly all sub-industries are expected to see a decline in employment through 2027.The sector is most concentrated in the Northeast, Pacific Northwest, and Southeast regions in the US. Maine has the highest employment concentration[2] (6.1), followed by Oregon (5.8), Mississippi (4.6), Alabama (3.8), and Arkansas (3.7).

Revenue

The natural resource segment of the sector (Logging, Timber Services, and Forest Support Services) had a total of $21.6 billion in revenue in 2022, while the lumber and wood products segment had a total of $153.5 billion.

Logging was the largest natural resource industry by revenue, reaching $16 billion. Meanwhile, Sawmills and Wood Production; Wood Paneling Manufacturing; and Paper Mills together make up 83% of the lumber and wood products segment.In the past five years, the forestry and lumber sector’s revenue has grown by 7%. Some industries have seen significant declines, including Paper Mills (-22%), Timber Services (-10%), and Logging (-5%).

During this period, losses were fully offset by gains in other industries, such as Forest Support Services (+52%), Wood Paneling Manufacturing (+32%), and Sawmills and Wood Production (+26%). Through 2027, the trend is projected to reverse.The sector’s revenue overall is projected to decline by 9% from 2022-2027, totaling a $15.7 billion decrease. Nearly every sub-industry is projected to see revenues contract, but declines are driven by Paper Mills, which is projected to see the most severe decline in revenue, dipping 24% or $8.7 billion.

Supply Chain

The forestry and lumber sector has strong intra-industry supply chain linkages, with industries like Sawmills and Wood Production and Forest Support Services being both suppliers and buyers of the industry’s products. Other important buyers include Paper Product Manufacturing, Public Administration, Wood Pulp Mills, Logging, and Lumber Wholesalers.

Exports

Wood Pulp Mills exported $7.8 billion to foreign partners in 2022, accounting for 38% of all foreign exports in the lumber and wood products segment of the sector. Other major exporting industries include Sawmills and Wood Production ($4.3 billion) and Paper Mills ($2.5 billion).China and Canada are the United States’ two largest export partners for the forestry and lumber sector, accounting for approximately $4.3 billion and $3 billion of exports in 2022, respectively. Other nations such as Mexico, Japan, and the United Kingdom represent major trade partners.

Economic Trends Affecting the Industry

There are multiple key economic variables that influence the market performance of the forestry and lumber sector. These include:

• Trade-weighted index
• Price of sawmill lumber
• Housing starts
• Value of residential construction
• Value of private nonresidential construction
• Private spending on home improvements

Below is an overview of the strongest drivers of the industry.

Trade-Weighted Index

The Trade-Weighted index, otherwise known as the Nominal Broad US Dollar Index, measures the strength of the US dollar compared to the currency values of the nation’s trading partners and is calculated by comparing exchange rates to the magnitude of trade with other nations. When the Trade-Weighted Index is higher, the relative value of the dollar is stronger, meaning exports are less competitive in the global market.

While the index increased in 2022, it is expected to gradually decline through 2027. A lower trade-weighted index in the coming years would improve the competitiveness of the United States’ exports, creating further opportunities for the forestry and lumber sector to access international markets.

Price of Sawmill Lumber

The price of sawmill lumber has competing impacts on different segments of the forestry and lumber sector. While rising prices serve as a boost to revenues for industries like Logging and Sawmills, it deals a short-term blow to industries like wood product manufacturing that use lumber as a primary input.

The price of sawmill lumber has been somewhat volatile in recent years, spiking through 2021 and growing 52% from 2017-2022. Over the next five years through 2027, prices are expected to remain somewhat stable, declining slightly by 2%.

Housing Starts

Housing starts represent the number of new privately-owned housing units that started construction during the year, including both single-family and multifamily units. Housing starts are a good indicator of demand for residential building materials and lumber. Housing starts spiked in 2021, reaching 1.6 million units amid the COVID-19 pandemic and favorable borrowing conditions. However, starts are expected to decrease in 2023 and slow in the next five years as the housing market cools. Additionally, high interest rates are creating unfavorable borrowing conditions for homeowners and home builders.

Workforce Trends and Labor Challenges

Workforce is a major challenge to stability and growth in the forestry and lumber-related sectors.  In 2022, the top occupation in the sector was Logging Equipment Operators, which accounted for 33,592 jobs and 9% of total employment in the sector in 2022. Individuals who work in this occupation operate a wide range of equipment but tend to operate heavy machinery used in forestry activities. Overall, 95% of Logging Equipment Operators work in forestry and lumber.However, other top occupations are not as concentrated within the sector. In fact, many of the top occupations face significant competition for labor across other industries. These include Laborers and Freight, Stock, and Material Movers or Heavy and Tractor Trailer Truck Drivers, with about 1% of these workers in the forestry and lumber sector.

Heavy and Tractor-Trailer Truck Drivers, for example, were the sixth-most in-demand occupation over the last 60 months[3], with over 4 million unique job postings. Laborers and Freight, Stock, and Material Movers represented the eighth-most in-demand occupation during the same time period, with 3.4 million unique job postings. This being said, the forestry and lumber sector faces steep labor competition for its top occupations and likely will continue to struggle to fill these roles in the near future.

Challenges and New Horizons in Forestry and Lumber Products

The forestry and lumber sector will face various challenges in the next several years, which it will need to overcome in order to see growth.

• Projected Revenue Declines: Revenues are projected to decline through 2027, driven by steep contractions in Paper Mills ($8.7 billion). Revenue for Paper Mills has been on a steep downward trend nationally for the past 15 years, falling from $75.8 billion in 2005 to $36.1 billion in 2022. Rising e-commerce, online business operations, and global competition have threatened the industry’s performance, prompting diversification of products.Other key industries like Sawmills and Wood Production have seen rising success in recent years thanks to new construction fueled by COVID-19. However, rising interest rates, declining housing starts, and trade disagreements between the US, Mexico, and Canada will hamper future growth in the coming years.
• Workforce: As explored above, the sector is expected to increasingly rely on occupations that face significant labor competition, such as Heavy and Tractor Trailer Truck Drivers, Freight and Material Movers, various machine operators, and more. Not only will businesses within the forestry and lumber sector compete for these workers, but they will also compete with many other sectors throughout the economy for these highly transferable workers and skills.
• Climate Change: Changing climate will impact the way forestry operations are able to be undertaken in the future. Warmer winters will lead to shorter time periods where logging trucks can operate on frozen logging roads. Other impacts include wildfires and storms, new invasive species and insect outbreaks, and more.

Despite these challenges, several new opportunities exist on the horizon for the forestry and lumber sectors.

• Mass Timber, Structural Round Timber, and Cross-Laminated Timber: Mass Timber is a new category of wood product, comprised of multiple solid wood panels nailed or glued together, which provide exceptional strength and stability. It’s a strong, low-carbon alternative to concrete and steel.Mass timber includes cross-laminated timber (CLT), nail-laminated timber, glulam, mass plywood panels, dowel-laminated timber, and laminated veneer lumber. It can be used in a range of construction, including mid-rise construction common in so many New England cities.Structural Round Timber (SRT) is mass timber that uses minimally processed whole trees for the construction market. SRT is 50% stronger than a milled piece of lumber of the same diameter, with a weight-to-strength ratio equal to steel in tension[4]. What is more, because the outer fibers of the tree are left intact when fabricated for SRT applications, the variability curve for this structural material is closer to that of steel than milled wood.It is a more predictable material when left un-milled, and thus a wide range of often less marketable or lower value species can be sold to high-value applications at very attractive prices that represent a significant value uplift for local timber suppliers[5].

Currently, mass timber is more commonly used in the Midwest and Pacific Northwest, though recent activity, including in Maine, is occurring in the Northeast.

• Nanocellulose and Cellulosic Fiber: Cellulose and nanocellulose are derived from natural materials, including wood pulp. They have a wide array of potential applications and can be used to create materials with high strength but low weight. Additionally, they can be made from lower-quality wood that cannot be used for lumber or furniture. The US Forest Service notes that nanocellulose has the potential to be used in applications spanning from concrete reinforcement, electronic components, food preservation, and more.[6]
• Biomass and Biofuels: Wood biomass offers a renewable, less carbon-intensive alternative to fossil fuels and other biomass and biofuels. Interest in woody biofuel has gained traction in recent years as new technologies have improved the efficiency of wood fuels. These include wood pellets and compressed wood bricks, which can be made with wood by-products like wood chips and sawdust and burn with higher efficiency and lower particle emissions. In 2022, about 2.1% of US annual total energy consumption was from wood and wood waste — bark, sawdust, wood chips, wood scrap, and paper mill residues.[7]Wood biomass accounted for approximately 2,000 trillion BTU of energy consumption in 2022, approximately 15% of overall renewable energy consumption in the United States. Wood biomass consumption expanded in the 1970s and 1980s and has remained around 2,000 trillion BTU per year in the last two decades.

Takeaways for Business and Economic Developers

Focusing on forest and lumber products for targeted business and economic development is not for every area. A region must have reasonable proximity to forest land.

However, while the Northeast, Pacific Northwest, and Southeast have high concentrations for forest land, other areas of the country have some forest areas and/or proximity to lumber and wood-related product inputs.

In supporting and growing opportunities in these sectors economic and business developers should:

• Develop industry-driven workforce initiatives to bring new people into the workforce, given the importance of workforce and its existing challenges. Commit to training through the development of apprenticeships and recruitment of participants, including among non-traditional populations. Community colleges are the most typical source of apprentices in these industries but other models exist as well.
• Develop and foster partnerships among industry and research and development entities, including university research centers. Innovations in the use of wood for advanced materials, mass construction, and energy are occurring rapidly. This changes markets and creates new opportunities.
• Work with industry groups in both the wood and forest product industries but also in the Greentech and clean energy fields. Funding support at all levels is increasing in both of these fields.
• Support existing industry using B2B development through market analysis and trade show support. A list of suggested trades shows is indicated in the following table:
  

  Product Trade Shows
  Sector for Show	Name of Show
  Machinery and Equipment	Forest Products Machinery and Equipment Expo
  Machinery and Materials	Holz-Handwerk
  Millwork	Timber Processing and Energy Expo (TP&EE)
  Pulp and Paper	Fastmarkets Forest Products North America Conference
  Timber	International Mass Timber Conference
  Woodworking	AWFS Fair
  Woodworking	International Woodworking Fair (IWF)
  Woodworking	IWPA World of Wood Convention
  Woodworking	Ligna Hannover: World Trade Fair
  Woodworking	Wood Pro Expo Illinois
  Woodworking	Wood Pro Expo Lancaster

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[1] Unless otherwise noted, data for this section is derived from forestry and lumber economic performance from IBIS World Industry Reports, www.ibisworld.com. Data is for 2022 and represents 12-month data unless otherwise specified.

[2] Concentration is measured by location quotient (LQ), which compares the concentration of employment in an industry within a state to the overall concentration of the industry’s employment nationally. Values greater than 1.0 indicate that the industry is more concentrated in the state than on the national level.

[3] June 2018-June 2023

[4] Research conducted at the USDA Forest Products Laboratory (Madison, WI) indicates the superior strength of un-milled timbers. SDRT are 50% stronger in bending than an equivalent square section of milled lumber (Wolfe, 2000)

[5] Manufacturing Facility Feasibility Analysis, November 2022, Camoin Associates prepared for the Town of Ashland, ME, and Original Mass Timber Maine (OMTMaine)

[6] Murray, Lara and Androff, Amy. “The Greener World of Tomorrow: Build with Revolutionary Wood Products,” US Forest Service. 21 Oct 2021.

[7] Monthly Energy Review, April 2023, U.S. Energy Information Administration

Outdoor recreation is a critical component of local and regional economies across the US. This includes rural areas as well as densely developed urban areas. It contributes more to the country’s gross domestic product (GDP) than oil, gas, and mining combined and provides important amenities for residents and workers, contributes to healthy communities, helps protect the environment, and provides opportunities for businesses across multiple sectors, from services and manufacturing to retail.

Like most sectors, the outdoor recreation economy was impacted by COVID-19. Employment within the sector decreased by over 10% from 2019-2021 and sales decreased by approximately 16% from 2019-2020. It has since experienced recovery.

This article examines recent trends, opportunities, challenges, and successes in the US outdoor recreation sector and offers guidance to help economic developers grow their outdoor recreation economy.

Defining the Outdoor Recreation Economy

For the purposes of this article, our definition of outdoor recreation includes direct outdoor recreation as well as highly related manufacturing, sellers, and transportation. For the full list of sectors included in this analysis, see Table 1 at the end of this article.

In 2022, there were an estimated 2,964,703 jobs in the outdoor recreation economy in the US. As shown in Figure 1, attractions and activities jobs accounted for more than half of outdoor recreation employment, and wholesale/retail/rental jobs accounted for more than one quarter. Outdoor recreation-related manufacturing accounted for 6% of the jobs and transportation, such as scenic sightseeing jobs, only accounted for 1%.

Pandemic-Era and Recent Outdoor Recreation Trends

During the COVID-19 pandemic, employment in the outdoor recreation sector dropped from 3.1 million to 2.77 million, a more than 10% decrease from 2019-2021.

As the world recovers from COVID-19, employment is on the path to recovery as well. From 2021-2022, employment increased by over 7%. This is greater than pre-pandemic rates, which were 5.16% from 2016-2019. Employment has not returned to the pre-pandemic figure of 3.1 million, but it is forecasted to reach 3.12 million in 2024 and continue growing, exceeding past employment numbers in the sector (see Figure 2).

Gross regional product (GRP), which measures total economic output, has steadily increased by $68.07 billion in the US outdoor recreation sector since 2007, with the only significant drop from 2019-2020. In 2021, the outdoor recreation GRP was already back on track, and the trajectory seems largely unharmed by the pandemic.

Revenue in the US outdoor recreation industry has been on a steady incline since the 2008 recession. Despite a 16% dip in sales in 2020, revenue shot back up to pre-pandemic levels in 2023 and is projected to continue that steady growth for at least the next five years.

Major Outdoor Recreation Sector Trends

There are four high-level sectors in outdoor recreation economy: manufacturing, wholesale/retail/rental, attractions and activities, and transportation. Transportation and attractions and activities were much more volatile than wholesale/retail/rental and manufacturing during the pandemic.

While all four sectors saw dips in employment from 2019-2020, the greatest impact was on transportation-related jobs, with a 38% decrease. Attractions and activities had a 22% decrease, and manufacturing and wholesale/retail/rental saw 12% and 7% declines, respectively. The inability to travel and participate in activities during the pandemic is clearly reflected in these numbers, as is the lower demand for outdoor recreation equipment, such as boats and bicycles.

Attractions and activities had the largest recovery from 2020-2022 at 20%, followed closely by transportation at 18%. Wholesale/retail/rental and manufacturing have not been as quick to recover, at 11% and 8%, respectively. The pent-up demand for travel and public activities is reflected in this rebound.

Trends in Selected Subsectors

To further examine outdoor recreation, we look closely at three subsectors: athletic and sporting goods manufacturing (NAICS 33992), national parks and other nature institutions (NAICS 71219), and campgrounds and RV parks (NAICS 72121). Information for this section is pulled from IBISWorld, which uses a slightly different classification system than in Table 1.

Athletic and Sporting Goods Manufacturing

Although the athletic and sporting goods manufacturing subsector was negatively impacted during the COVID-19 pandemic, revenues quickly rebounded as the economy reopened and people felt comfortable leaving their homes again. Furthermore, as consumers continue to move towards more health-conscious lifestyles as a form of preventative care, demand for athletic equipment will rise.

However, the US is expected to import 55% of its athletic and sporting goods this year, totaling $11.4 billion (Source: IBISWorld). Demand for inexpensive athletic and sporting goods manufactured offshore is expected to grow and presents a challenge that US producers need to be aware of. These imports are dominated by China, which is expected to account for 54.8% of industry imports this year (Source: IBISWorld). This creates an opportunity for increased production and onshoring in the US.

The US is expected to generate $1.7 billion in exports of athletic and sporting goods in 2023, selling 23.7% to Canada and 11.3% to Japan (Source: IBISWorld). Exports have seen steady growth over the past few years, but are still small, relative to imports.

US companies should look for markets globally, as sports participation continues to grow worldwide, and the dollar is expected to weaken. This could benefit manufacturers and grow their international consumer base.

National Parks and Other Nature Institutions

The national parks and other nature institutions subsector excludes state, regional, and local parks, historical sites, botanical gardens, and zoos.

The industry is unique in that it profits only from on-site sales, including admission, concessions, and accommodations (apart from grants and donations). Additionally, operators are reliant on in-person employees.

This combination was lethal for some parks during the COVID-19 pandemic when most people stayed home and international travel was halted. Many operators had no choice but to close their establishments, and not all were able to reopen.

Some parks that have reopened have had to reduce their hours of operation due to profit margin or staffing issues. Many state governments have cut funding for state-funded parks, which are in turn looking for new ways to generate revenue, such as implementing new fees or raising existing ones. Other options include offering new amenities, such as gift shops, upscale cafes, and more.

Things are looking up, however, as schools are once again able to go on field trips and with the rise of eco-tourism and environmental awareness. Revenue is forecasted to grow at an annual rate of 1.3% over the next five years, reaching $1.4 billion by 2028 (Source: IBISWorld).

The number of domestic trips taken by US residents and inbound trips taken by foreign residents in 2023 and beyond is also expected to increase, as is disposable income. This rebound of tourists with pent-up demand for travel and sightseeing, combined with added discretionary income is an opportunity for parks to capture.

Campgrounds and RV Parks

The COVID-19 pandemic, while spurring a spike in RV sales, caused a significant decline in the demand for RV parks and campgrounds themselves because of travel restrictions and orders to stay home. However, the pent-up demand for travel is now driving consumers back to campgrounds and RV parks.

A couple of important related factors — demand for RV dealers, number of domestic trips, per capita disposable income, and the number of people over age 50 — are expected to increase in 2023, boosting demand for RV parks and campgrounds. The growth of this industry will be impacted by the trajectory of fuel prices, but revenue is forecasted to rise from $8.7 billion to $9.6 billion in the next five years (Source: IBISWorld).

The demographics visiting RV parks and campgrounds are changing, as remote work allows young people to camp, and operators introduce Wi-Fi to their grounds to accommodate these workers. In 2021, more than half of new campers were millennials (Source: IBISWorld).

As a result, camping and “glamping” are becoming increasingly popular and possible. Hotels provide competition, as the ability to book online is convenient and the amenities are often better. However, parks and campgrounds can offer luxuries such as yurts and swimming areas and provide online booking to help combat these challenges.

An emerging opportunity in this industry is the appearance of camping equipment and RV rentals, which allows for greater flexibility, lower prices and commitment, and the opportunity to try out a different lifestyle. Campground and RV park operators should encourage these rental companies, which could help bring them more business.

Outdoor Paths to Economic Success

Conservation is crucial to success in the outdoor recreation industry. In fact, a 2019 study found that increased land conservation in New England correlated with job growth because of the increase in outdoor recreation jobs. However, protecting lands and waters from development for recreation can be politically divisive as some forms of outdoor recreation can still be quite disruptive to habitats but development is seen as having economic benefits. Therefore, it is important to have a state office dedicated to outdoor recreation which can help with policies and guidelines.

Starting with Utah in 2013, 18 states have created Offices of Outdoor Recreation (ORECs). These offices support economic development, conservation and stewardship projects, youth engagement, and other related initiatives.

Even if your state does not yet have an outdoor recreation office, the US Environmental Protection Agency offers planning assistance through the Recreation Economy for Rural Communities program, helping rural communities leverage their outdoor resources to grow their economies. In 2022, 25 communities were selected for program assistance from Maine to California. The goals of these partnerships include creating trails and green spaces, improving public water access and signage, engaging underrepresented communities, and more.

Funding is also available from the US Economic Development Administration through the Outdoor Recreation Roundtable (ORR), which provides a Rural Economic Development Toolkit as well as implementation grants. The ORR has already designated millions of dollars of funding to rural communities.

Success in Detroit

Detroit, Michigan, is just one example of the many cities and states working to bring the community back to nature and informs us that outdoor recreation is important and an economic driver in both rural and urban areas.

The Dequindre Cut Greenway in Detroit is a two-mile recreational path in the city that welcomes bicyclists and pedestrians. Opened in May of 2009 through a partnership between the city, Rails to Trails, the GreenWays Initiative, and the Downtown Detroit Partnership, the Cut is now host to an art walk, bicycle rentals, and a yearly event called “Camping on the Cut,” which allows community members to pitch a tent and experience camping, some for the first time. , Sites like the Dequindre Cut introduce people of all ages to outdoor recreation experiences for free and can improve the health of the community and the desirability of the area.

Art at the Dequindre Cut Greenway in Detroit

In Conclusion …

The outdoor recreation sector is recovering from the COVID-19 pandemic quickly. Employment is expected to reach pre-pandemic levels by 2024, the GRP is still on an upward trajectory, and revenue is already back to pre-pandemic levels.

At the subsector level, challenges include high rates of imported athletic equipment, low profit margins for national parks, and competition for luxury camping space.

Potential solutions include expanding the athletic equipment customer base worldwide as the dollar loses value, changing the fee structure when offering new amenities at national parks, and providing more luxurious outdoor spaces and amenities, as well as online booking, for campers and RV owners.

To support outdoor recreation growth and economic growth, economic developers should:

• Determine if their state has an outdoor recreation office and, if so, utilize their resources and partner with them
• Work with policymakers to encourage conservation as an integrated part of economic development
• Explore partnerships with the Recreation Economy for Rural Communities program or the ORR to develop local opportunities for outdoor recreation
• Support local business and entrepreneurs that are starting and attempting to grow businesses within or related to the outdoor recreation economy through effort in workforce development, access to funding/capital, and market information
• Add a targeted industry page on your economic development website highlighting the outdoor recreation economy and proving data on recent news, businesses, workforce, assistance programs
• Attract companies that fill a gap in the outdoor recreation ecosystem. The list below has some of the larger trade shows that are a potential fit for attendance depending on the specifics of a community:
  • Great American Outdoor Show (fishing and hunting)
  • SHOT Show (fishing and hunting)
  • Outdoor Retailer Summer Trade Show (retail)
  • Outdoor Retailer Winter Trade Show (retail)
  • The Big Gear Show (retail)

These opportunities can help to further grow the outdoor recreation industry, which is not only good for our economy but good for our community health.

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