Trade Deficit Widened to Record $71.1 Billion
U.S. Exports fell 2.6% to $187.3 billion in February as a confluence of factors prevented shipments. Supply-chain disruptions, winter weather, and continued pandemic restrictions caused ports to become overcrowded with goods unable to depart for their destinations. The hardest hit industries from this include energy, food, capital goods, and automotive vehicles. Texas bore the brunt of weather related declines as the state-wide blackout resulted in exports from Texas dropping 21% in February compared to January. The weather also amplified the shortage in semiconductor chips, which led Samsung to halt production at two chip factories in Austin, Texas, decreasing production by 72%. As a result of the shortfall, General Motors temporarily closed three of its assembly plants through mid-March. Globally, automakers are expected to lose roughly $60 billion in sales due to the semiconductor supply squeeze.1 2 3
$2 Trillion Infrastructure Plan Aims to Revitalize Manufacturing
President Biden unveiled a $2 trillion infrastructure package to aid the economy in recovering from the pandemic. The proposal, which includes transportation infrastructure, healthcare, affordable housing, renewable energies, and upgrading schools, also includes $580 billion in American manufacturing, research and development, and job training efforts. The package hopes to restore and create new manufacturing jobs in America through its investment.4
Industrial Production Decreases in February
In February, total industrial production decreased 4.2% compared to the same month last year. Manufacturing output and mining production fell 4.1% and 15.3%, respectively. Severe winter weather in the South Central Region of the country in mid-February accounted for the bulk of the month's declines in output. Capacity Utilization for the industrial sector decreased 4.0% compared to February last year to 73.8%, a rate that is 5.8% below its long-run average. The output of utilities is the only sector that increased from the prior year, but the 10.1% increase wasn’t enough to offset declines in other sectors.5
Columbus McKinnon Completes Acquisition of Dorner Manufacturing Corporation
Columbus McKinnon announced on March 1, 2021 it was acquiring Dorner Manufacturing Corporation for an all-cash purchase price of $485 million, representing a transaction multiple of 18.7x EBITDA. The combination will expand Columbus McKinnon’s platform in the specialty conveying space and leverage leadership to scale the intelligent motion solutions for material handling.6
USA Rare Earth Considering to go Public Through SPAC
USA Rare Earth LLC, a mining company, focused on resources essential to technology, is considering going public this year with a target valuation of over $1 billion. The company intends to go public through a special purpose acquisition company (SPAC) as they remain a popular way to bypass the traditional IPO process. Investor interest in rare earths is expected to be higher now amid attempts to diversify supply out of China and growing demand from the auto and renewable energy industries. Despite intense competition from China, USA Rare Earths plans to mine several rare earths in Texas to produce the strong magnets used in electric motors, missiles, and wind turbines.7
Caterpillar Signals Slight Recovery to Pandemic Demand Damage
A construction slowdown during the pandemic is hurting demand for Caterpillar’s heavy machinery, but the company expects a turnaround this year. A rebound in home construction boosted purchases for some machinery; however, spending cuts by local and state governments gutted demand for road construction equipment.8
Largest Transactions Closed
- Assets of Tuthill Vacuum & Blower Systems
- Ingersoll Rand, Inc.
- Sisu Extraction, LLC
- Left Coast Ventures
- South Carolina Sawmill
- Interfor Corporation
- Cryogenic Gas Technologies, Inc.
- Chart Industries, Inc.
- OSW Equipment & Repair, LLC
- Federal Signal Corporation
- European and American Core Business of Pfaudler, Inc.
- GMM Pfaudler Limited
- Blue Bird Cororation
- Undisclosed Buyer
This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.
EBIT - Earnings Before Interest and Taxes