As the artificial intelligence (AI) industry grows and data center construction surges in the United States, traditional manufacturers such as generator, steel, and piping companies are also benefiting.
On the 19th (local time), Reuters said demand is rising for various machinery, equipment, and infrastructure materials, including generators and transformers, electric cables, piping, cement, and prefabricated metal wall panels, as power and cooling systems needed for data center construction expand.
Market research firm Wood Mackenzie projected that the U.S. electrical equipment market related to data centers will double from $33 billion (4.582 trillion won) in 2025 to $66 billion (9.16 trillion won) in 2030.
The expansion of data center construction is also translating into increased hiring at manufacturers. According to the U.S. Labor Department, U.S. manufacturing jobs rose by 5,000 in July. That contrasts with a decrease of 113,000 in the same period last year.
Generac, which makes home backup generators, plans to invest $250 million (347.15 billion won) to expand its production lines by the end of next year to meet demand for high-performance generators for data centers. Its data center-related order backlog stands at $1.6 billion (2.2217 trillion won), and the company plans to hire about 1,000 additional employees, roughly 10% of its total workforce.
Timken, a steel bearing manufacturer, has also secured new customers beyond its existing core clients in defense and aerospace as orders increase for parts used in data center buildings and equipment.
However, Reuters noted that it is premature to interpret data center-driven demand growth as a recovery across U.S. manufacturing. A survey by the Institute for Supply Management (ISM) showed the sector remains sluggish. Demand for consumer goods has declined due to high inflation and a slump in the dwellings market.
Within corporations, fortunes diverged by institutional sector. Generac is seeing a surge in demand for data center generators, but sales of its existing flagship product, home generators, are sluggish.
The industry is also wary of uncertainty over how long data center demand will last. If companies carry out large-scale capital investments and data center construction slows, it could lead to excess capacity.
Siemens, an equipment maker, is investing in new plants while locking in demand by signing multi-year contracts with customers. It has spread investment risk by imposing millions of dollars in penalties if customers fail to take the volumes they contracted.
Southeastern Hose, a metal hose company, has tripled its data center-related sales and hired 60 new employees, but it is also working to maintain relationships with existing customers. To prepare for a potential decline in data center demand, its strategy is to maintain its traditional customer base, such as steel mills it has had a transaction with for 60 years.