Video transcript

Nick Heymann: I'm here today to discuss a new renaissance underway in global industrial capital spending.

Last peak in capital spending was back in 2014 at the top of the commodity cycle, which ran for over a decade. However, since then it's been really quite a becalmed period for capital spending around the world. But today, coming out of the pandemic, there are three key factors that are really helping now set the stage for capital spending to run at least through the mid if not all the way towards the end of this decade. The first is a huge labor shortage. We have 10.4 million jobs that are currently unfulfilled in the U.S., but ironically, 5.4 million new businesses were established in the last 12 months, and that's the highest since 2004. And as a result we really need to automate all kinds of new facets of our economy that previously were occupied by people that held jobs often considered dangerous, dull, boring, and now give rise to replacing labor with inexpensive capital. The second is the shift in energy away from fossil fuel and to PV solar and renewable and green hydrogen. This is going to take a while but is well underway and rapidly accelerating today. We believe that this is going require huge investments to upgrade all our grids and the generation capacity to produce electricity, as well as all the transportation modalities and the energy they use to be able to operate around the world. And the third key element associated with this capital spending surge is the need to re-shore production. We've had tremendous disruption within the global supply chains, and as a result we've had now a need to move back closer to where the goods are actually consumed rather than putting them on the other side of the world for the lowest cost. Resiliency is the new gain and that is causing tremendous new investment to bring back pharma, semi-conductors, and many other industries that are critical for the success of the global economies. So where does this all leave us? We're automating fast food restaurants. Now inside of 20 people behind the counter to prepare food, there'll be two. We're going to automate farming. John Deere believes within five years we'll have fully autonomously operated farms with no need for human intervention. We're going to automate warehouses. We're going to automate grocery store, online fulfillment.

So there's a lot of new sources of need for automation and this is going to create a massive influx in capital spending. If we do this right what we're going to end up with is a big bonus for everybody in the global economy. And what that is, is higher productivity. Productivity is averaged only 1.57% since 1947. In the last few years it's been plus or minus 2%, but soon we think in a couple years it'll be at 3% or 4%. What that means is a higher standard of living, better quality of life for everybody in the world. That is why the renaissance in capital spending is good news for everyone.