“Market Outlook 2026 – 2027“

The One Big Beautiful Bill Act (OBBBA), signed into law on July 4, 2025, was designed to introduce significant changes to the U.S. federal tax code and financial landscape, impacting individuals, businesses, and federal programs. OBBBA follows on the footsteps of Biden-era Acts, including the Bipartisan Infrastructure Law, the Inflation Reduction Act, and the CHIPS and Science Act.

While the OBBBA provides tax incentives to developers, owners and those in the construction industry – primarily in the industrial sector – the Obama-era Acts have collectively provided hundreds of billions in funding for new and modernized infrastructure, clean energy, and manufacturing projects across the U.S.

Together, these Acts are having profound effects, helping to increase the backlogs of EPCs, OEMs and constructors in select markets including semiconductors, simple and combined cycle generation, data centers and manufacturing. So, with all this federal input, what can we expect in the short term.

The industrial construction outlook for late 2025 through 2027 is one of moderating growth, shifting demand, and persistent challenges. Following a post-pandemic boom, the sector is recalibrating with a focus on specific niches, including manufacturing, data centers, power generation and specialized logistics facilities. Here is a look at three of our customer types.

• Engineering, Procurement and Construction (EPC): The outlook for EPC companies in 2026-2027 remains positive, with sustained growth driven by ongoing federal infrastructure investments, a robust energy sector, and steady demand in traditional energy. However, potential headwinds include moderating solar installation rates post-2026, rising material costs, labor shortages, and economic uncertainties.

• Original Equipment Manufacturers: The outlook for U.S. industrial original equipment manufacturers (OEMs) in 2026-2027 is cautiously optimistic, characterized by moderate growth amid economic recovery, technological advancements, and sustained demand in key sectors like automotive, machinery, and high-tech equipment. However, challenges such as policy uncertainties (e.g., tariffs and regulatory changes), persistent labor shortages, and supply chain vulnerabilities could temper expansion.

• Constructors: The forecast for U.S. industrial general contractors in 2026–2027 is mixed, with the segment facing a downturn after a period of rapid expansion. While certain specialized areas like data centers and energy projects will see continued investment, the broader manufacturing and warehouse sectors are predicted to contract or slow down.

• The construction of data centers is expected to be a primary growth engine for industrial contractors through 2026 and beyond. Spending on these facilities is predicted to continue at a high rate, although potential issues like power constraints and equipment shortages could cause a slowdown. Forecasts project annual growth rates of 20% to 40% in this sub-sector through 2026.
• Forecasts for 2026–2027 indicate a strong U.S. power generation market for industrial general contractors, driven by surging electricity demand from data centers and manufacturing facilities. This growth will require substantial investments in new generation capacity, especially in renewables and natural gas. However, the market will also be shaped by persistent headwinds, including high costs, labor shortages, and regional grid constraints.

For most of 2025, Dixie Mechanical’s pipe fabrication and mechanical construction divisions have continued to support our customers, from project development through project completion. Our estimators and project managers have been burning the midnight oils and we will continue to do so. 2027 will mark our 25th anniversary serving the industrial markets throughout the United States. Join us as we prepare for the next 25!