2025 – Challenges, Opportunities on Deck for Economic Development

If you build it, can you power it, staff it, supply it, and sustain it? The year 2025 will see professionals in commercial, economic, and policy development tackling major shifts in industrial demand and capacity, including a growing near-insatiable thirst for electrical power.

Challenges will also bring opportunity, according to Jason Hickey, President of Hickey & Associates, LLC. Dramatic change with new-generation AI applications and related innovations will open new doors for major advancements. But what’s at stake, particularly in the short-term?

With such conditions, the United States and much of the Western world faces a potentially “dangerous and perplexing moment,” especially during natural disasters, Hickey told professionals at the annual conference of the Indiana Economic Development Association (IEDA). For example, “North Carolina was caught completely off guard” from the devastating remnants of Hurricane Helene as it moved north in 2024.

As power-hungry data centers, electric vehicles, AI accelerators, crypto mining, and Industry 4.0 automation strain resources from aging and creaky electrical infrastructure and production, policy makers and industry planners must find new sources to tap into – and quickly.  “Demand on power capacity is unprecedented.”

Sweeping logistical change

The COVID-19 pandemic accelerated major trends that were appearing. Unresolved bottlenecks in supply chain management have forced basically all companies to pivot to a “just in case” inventory stockpiling approach in place of “just in time” (JIT). If supply is important and available, buy it and store it, regardless of whether it ties up capital.

An outcome, according to Hickey is that “for every dollar of U.S. domestic gross product, at least 20% more logistic space is needed today than before the pandemic.”

As a new Presidential administration sets course, shifts in global trade and manufacturing adapt to new market forces. The result? “More than 80% of the site selection projects originating from Asia-Pacific are now considering a Mexico site in their top five locations,” reflecting a change in on-shoring manufacturing strategy, Hickey said.

As talk of new restrictive tariffs heats up, “many companies have established alternative supply chains,” adding to the cost of production.

Workforce needs

Considering a new site for relocation? The selection solution must consider the availability and affordability of childcare, access to reliable transportation (including public transit), and satisfying potential spousal employment opportunities for skilled workers attracted to a region.

With a societal shift continuing in population migration across the United States, younger workers also seek access “to affordable pathways to upskill their job,” says Hickey, noting that a critically important task for workforce development is to “stop the brain drain” of critical workforce exiting a region. This is especially vital as younger workers “continue to move from rural to urban areas.”

Relocation professionals must focus on identifying optimal talent pools. “It’s hard to find new people – everyone has a job who wants one” in the current U.S. labor market. Immigration policy will make a huge impact on economic development – it is time to prepare for change.

Major shifts in funding

Trillions of dollars in federal funding flooded U.S. development efforts during the Biden Administration from the Infrastructure Investment and Jobs Act (IIJA), the Inflation Reduction Act (IRA), the CHIPS Act, and more. While many federal projects and their accompanying funding are wound into current economic activities across the United States, unallocated funds “are likely to be swept” and refocused in the new Trump Administration.

“Now is not the time to put blinkers on,” Hickey emphasized. “Change is coming.”

Changes will take time

Many positive opportunities currently exist and will continue across America and the West. American expansion and relocation opportunities “are not going to fall off the earth” with the political change.

But future success “requires planning.” With AI, automation, and advances in manufacturing technology, count on a continuing focus on “cheaper, better, faster.”

Societal and economic change won’t occur overnight. “It will take time for the Trump Administration to change and open opportunities,” said Hickey, noting that new policies will evolve and adapt. New energy policies and programs will be required in short order to meet exorbitantly growing demand, including grid upgrades and new energy policies for nuclear and other energy sources, especially as fossil-fuel power plants reach retirement.

Faced with a possible “federal funding fiscal cliff” in 2025, state and regional agencies are already positively reacting and preparing for change.  Successful relocation efforts will find balances in cost, quality and risks.

What’s vital for success in an era of change? Identifying new opportunities, building trust through community engagement, and developing new means for collaboration.

By Michael Snyder, MEK