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Ingersoll Rand CEO: Reshoring Push Is Real

May 25, 2022
The maker of compressors and pumps recently reported double-digit growth for a number of its brands.

The dollars won’t show up in government data for at least a few more months but the trend of shortening supply chains and reshoring production is very real, the leader of Ingersoll Rand Inc. told an investment bank conference May 25.

“We are seeing a lot of customers expanding their capacity locally,” Vicente Reynal, Ingersoll Rand’s chairman, president and CEO told the 15th Annual Wolfe Research Global Transportation & Industrials Conference. “Whether it is diecasting facilities in the U.S. or anything that they want to really accelerate, they need compressed air in order to be operative. We’re definitely seeing a lot of that happening.”

One group of companies feeding nicely into Ingersoll Rand’s business of selling compressors, pumps and vacuum and blower products are semiconductor manufacturers. The push to expand production in the United States – led by Intel Corp.’s $20 billion plan in Ohio – and a number of other countries will call for a lot of IR gear, he said.

“We definitely get a lot of feedback from our channel as well as direct sales guys,” Reynal said at the Wolfe event. “It is real. It’s also [real] in our case as well. We’ve been talking about relocalizing our supply chain to be concentric with our factories.”

IR, which employs about 16,000 people on six continents, early this month reported first-quarter profits of about $104 million on revenues of $1.34 billion. That reversed a year-earlier loss of $90 million that included a $180 million loss from discontinued operations. Operating income rose nearly 30% to $157 million in Q1 on the back of double-digit growth from several divisions serving industrial end markets.

Reynal’s positive comments about reshoring and capital investment in domestic manufacturing capacity provides a real-time look into a trend that took shape soon after the start of the COVID-19 pandemic. And it looks likely to add another leg to the rebound in U.S. capital spending from its big drop in the spring of 2020. A report this week from the Institute of Supply Management supports that theory: The group’s semiannual economic forecast showed that cap-ex is expected to grow 7.4% this year.

Shares of IR (Ticker: IR) rose nearly 2% to $45.88 May 25. Year to date, however, they are still down more than 20%, a move that has trimmed the company’s market capitalization to about $19 billion.

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