Industrial Services Sector Showcases Resiliency, Despite Lasting Pandemic Impacts

Last year, the U.S. Industrial Services sector faced significant challenges resulting from the COVID-19 pandemic. This year the situation has begun to improve, but uncertainty in the market remains as dealmakers are faced with several lasting impacts.

  • Many consumers made large purchases with the stimulus and savings accumulated during the pandemic, making the supply and demand relationship further out of balance…
  • Ongoing global turbulence —everything from lockdowns in China to the ongoing war in Ukraine impacting energy costs and blocking shipping routes…
  • The much-publicized semiconductor shortage, which affects the supply of almost everything – from vacuum cleaners to automobiles. 

Yet, despite these many challenges, future growth is evident.

The landscape may have shifted, but American manufacturing is poised for future expansion. In 2021, U.S. firms created over 349,000 new manufacturing jobs—the most in nearly 30 years. And today, even with our current supply chain woes, most manufacturing companies still have a positive outlook on future demand, revenue and customer satisfaction.

Can government tip the scales?

Another factor working in favor of American manufacturing is Washington involvement. The recently passed CHIPS and Science Act will provide $52.7 billion for American semiconductor research, development, manufacturing, and workforce development. This includes $39 billion in manufacturing incentives, including $2 billion for the legacy chips used in automobiles and defense systems, $13.2 billion in R&D and workforce development, and $500 million to provide for international information communications technology security and semiconductor supply chain activities.

All told, the legislation authorizes $200 billion over 10 years to boost U.S. scientific research to better compete with China.

“Made in America” is making a comeback.

This government assistance, coupled with the supply chain stress overseas, is driving many companies to re-think their sourcing strategies. This shift in strategy should lead to greater domestic production and capacity in the coming years as companies look to decrease their reliance on overseas relationships.

The companies that have successfully weathered and adapted to the ongoing supply chain challenges will stand out as market leaders to potential investors.

Looking to sell your industrial services business?

Our M&A advisors can help. Private equity investors are out there now looking for the right kind of company—and we know exactly who they are.

Despite the challenges, transactional opportunities remain plentiful for industrial services companies in 2022. If you’d like more information or you want to discuss your options, Matthew Gladdish at Hyde Park Capital is eager to help. Call him today at 813-383-0202, or contact us via our website. We’re excited to put our M&A services and experience to work for you.