Evidence shows that the ancestors of modern humans used tools as early as 3 million years ago. In nearly all the time since then, the tools used by modern humans and their hominid ancestors were limited by the power users could physically apply. Over time, humans augmented that power through the domestication of animals and the introduction of simple machines.
With the advent of steam power and its application about 300 years ago, productivity was no longer limited by human or animal power. Electricity further progressed human productivity into the modern age. All subsequent advancements in the tools that help us manipulate materials to form new products would rely on the foundational technology of power generation and distribution, and the most modern technologies rely more and more on this building block.
Data Never Sleeps
Writing in a July 2024 article for The Atlantic, Arthur Holland Michel likened social media posts to “turning on a lightbulb forever.” While Michel acknowledges some shortcomings in calculating the impact of digital activities, his analogy highlights the physical implications of our increasingly data-dependent lives: As technologies on the cutting edge of every field grow ever more reliant on data, the generation and distribution of power becomes more important to the functioning and advancement of the economy.
Interestingly, the month that Michel’s article was published in The Atlantic, investment in manufacturing technology from electrical equipment manufacturers hit its 2024 low. Orders then trended upward for the remainder of the year. As we focus on emerging technologies, many of which rely on access to troves of data and the computing power to process them, it is important to also take note of electrical equipment manufacturers – those whose products enable these modern technologies.
Power Lifting
Electrical equipment manufacturers supply products such as transformers, motors, generators, switchgear and switchboard apparatus, relays, and industrial controls. Investment in manufacturing technology from this sector generally correlates with the wider market for manufacturing technology and follows roughly the same business cycle but with slightly shallower declines and steeper recoveries than the total market. The first notable exception to this trend came in the summer of 2011 and again in 2012, when orders grew rapidly. From January 2011 to December 2012, average monthly orders were more than double the long-run average for monthly orders.
The second departure from trends in the total manufacturing technology market is currently underway. After two years of rising orders, the industry saw a decline in manufacturing technology investment beginning in the first quarter of 2023. This shift occurred about half a year after the total market began trending downward. Unlike the wider market, which is still in decline, orders from electrical equipment manufacturers turned positive in the last quarter of 2023 and have been on an upward trend since.
While the 2011-2012 increase in orders was driven by a handful of months with outsized orders, the current departure is because of sustained demand above the long-term trend. Average monthly orders in 2024 from electrical equipment manufacturers are approximately 20% above the long-run average. While the total orders for manufacturing technology are down by modest single digits, electrical equipment manufacturers have increased orders by over 15% from 2023.
Are We Entering a Supercycle?
Just as early humans’ original tools were constrained by their power sources, today’s modern technological advances are limited by their access to sufficient and reliable supplies of electricity. Some have characterized the present market as the beginning of a “supercycle” for electrical equipment, as the world’s energy needs grow and new sources of electricity generation are employed. Further investment in manufacturing technology from electrical equipment manufacturers will lay the foundation for not only the future of manufacturing technology but any emerging technology across every corner of the economy.
To read the rest of the Emerging Technology Issue of MT Magazine, click here.
