News Summary
Equipment lenders are increasingly focusing on the manufacturing and construction sectors, driven by favorable tax incentives, advancements in material handling, and a reshoring movement. With projections indicating a significant expansion in the material handling leasing market, lenders are leveraging strong partnerships and technology to meet rising demand. The construction sector, backed by growing infrastructure spending, also presents lucrative opportunities for financing. As these sectors prepare for growth, equipment lenders are optimizing their services to navigate the evolving landscape.
Equipment Lenders Target Manufacturing and Construction Sectors for Growth
Equipment lenders are increasingly turning their focus towards the manufacturing and construction sectors as opportunities for growth appear promising due to recent tax breaks, innovations in material handling, and a trend toward reshoring. This shift comes at a time when the U.S. material handling leasing and finance market is expected to play a vital role, with projections indicating substantial growth from $9.4 billion in 2024 to $16.3 billion by 2032, translating to a staggering growth rate of 73.4%.
Expanding Industrial Machinery Market
Globally, the industrial machinery market is forecasted to double, reaching $2.1 trillion by 2037, positioning North America to capture 48.6% of the revenue share. This positive trend underlines a strong demand for essential manufacturing equipment, which includes items like forklifts, conveyor belts, electric generators, drilling machines, and air compressors.
Reshoring and Tax Incentives Driving Activity
The focus on manufacturing equipment is particularly driven by efforts to bring production back to the U.S. through reshoring. Additionally, new tax incentives from President Trump’s One Big Beautiful Bill Act are proving to be attractive. Notably, this legislation includes a 100% expensing provision which allows companies to deduct the entire cost of qualifying equipment in the year it is purchased, instead of spreading it out over several years. This can lead to a significant acceleration in purchasing as businesses rush to take advantage of these benefits.
Maximizing Tax Benefits for Borrowers
Equipment lenders have a critical role in assisting borrowers in identifying qualified production property eligible for immediate deductions, including on used equipment. This knowledge enables businesses to take full advantage of existing tax benefits, thereby encouraging spending in both manufacturing and construction.
Construction Sector Insights
Funding in the construction sector is equally attractive to lenders. There is significant interest in areas such as roofing, granite, landscaping, and small construction companies. Essential for this funding boom is the stability of equipment values, which remain steady and ultimately reduce the risk for lenders. The ongoing demand for construction services, in conjunction with these stable equipment values, provides more secure investments for those in finance.
The Role of Strong Relationships
In both sectors, establishing strong vendor-partner relationships and promoting technological integration is critical for maximizing growth opportunities. Collaboration among industry players enhances the ability to deliver innovative solutions and improve efficiencies, benefiting all parties involved.
Infrastructure and Future Projections
A surge in infrastructure spending is also lending confidence to lenders in the construction market. Projected starts for infrastructure projects are expected to increase by 10% in 2025, ultimately reaching a value of $360 billion according to recent analyses. This uptick in funding sources fosters a sense of optimism in both the construction and manufacturing sectors as businesses seek to capitalize on the favorable economic climate.
Conclusion
As equipment lenders pivot toward the manufacturing and construction sectors, the outlook remains optimistic fueled by reshoring, tax incentives, increased infrastructure spending, and the robust performance of equipment.values. The strategic integration of technology and strong vendor relationships will play crucial roles in sustaining this growth trajectory, making these industries attractive avenues for future investments.