The demand for electricity by Artificial Intelligence processing data centers and the electrification of everything has also increased demand for electrical infrastructure equipment.
As the use of AI in business, industry, and everyday life expands, the need for more power and electrical distribution equipment including switchgear and transformers will continue.
Tariffs, Imports and Electricity
Trade policy changes, including tariffs, pose an additional challenge. Not only can tariffs lead to higher repair and replacement expenses, particularly for businesses that rely on imported machinery or parts, but the uncertainty surrounding future trade policies discourages long-term investment in diversified supply chains.
Imposing tariffs could also have a significant impact on the supply of electrical equipment, which is already stressed by scarcity and high demand.
In a June 2024 report, the National Infrastructure Advisory Council estimated that only 20% of large power transformers were produced in the U.S. The U.S. Department of Energy has proposed new transformer efficiency standards that would require some types of transformers be made with amorphous steel, which cannot be sourced domestically.
Whether they own a transformer or not, all businesses rely on electricity. Longer lead times for repairing or replacing electrical equipment could result in increased downtime and business interruption.
Plan to Prevent Breakdowns
Two key strategies can make a big difference to help avoid equipment-related shutdowns and insurance claims.
- Have contingency plans in place. Be ready to respond to an unexpected incident or disruption with spare parts and backup equipment, lead time planning, inventory strategies, and agreements with suppliers and equipment manufacturers. Be aware and prepared for economic shocks to stay in operation, minimize financial losses, and protect customer relationships.
- Focus on equipment maintenance. Avoiding breakdowns can help ease the impact of economic trends on the bottom line. Maintenance is a broad concept that applies to any critical equipment. Whether it involves preventive care, corrective repairs, cleaning, or software updates, maintaining high-functioning equipment is essential for smooth and stable operations.
A business owner may not think about the effects of inflation, supply disruptions, and economic policies on the equipment they rely upon. Yet, equipment is essential to compete in today’s global economy. Those who manage organizations must focus on the factors they can control, including contingency planning, equipment maintenance, and comprehensive insurance protection that provides services to help maintain operations and prevent loss.