America's Two-Decade Disinvestment in Grid Manufacturing Caused the Transformer Supply Chain Crisis
Source: "Power grid transformer shortage exposes deep supply chain collapse | Fox News." August 7, 2026. www.foxnews.com
The Gist
For 20 years electricity demand was flat, so the industry stopped training workers and building factories to make power grid equipment like transformers. Now that demand for electricity is surging again (thanks to AI data centers and other factors), we don't have enough transformers, materials, or skilled workers to keep up, and unlike factories, skilled workers can't be quickly created—this crisis will take decades to fix.
Conclusion
The U.S. faces a severe, slow-to-fix power transformer supply chain crisis because two decades of flat electricity demand caused the country to hollow out its manufacturing capacity and technical workforce, and rebuilding this capability will take decades even as demand surges.
Premises
- From 2010 to 2020, U.S. electricity consumption fell by roughly 1%, leading utilities, manufacturers, and steel mills to rationally stop investing in new capacity, apprenticeships, and workforce recruitment.
- Since 2020, electricity demand has climbed about 7%, and demand for large power transformers has surged 116% since 2019, driven by data centers, reshoring, electrification, and grid hardening.
- The U.S. now imports roughly 80% of large power transformers, has only one domestic producer of grain-oriented electrical steel, and faces transformer lead times of nearly two and a half years with prices up 77% since 2019.
- The existing transformer fleet is aging (average age 38 years, 70% over 25 years old) and needs replacement at the same time new capacity must be built.
- The specialized human expertise needed to design and build transformers (winding coils, metallurgy, high-voltage testing) is tribal knowledge passed hand-to-hand on shop floors, not taught in any current U.S. academic program, and is held by an aging workforce (half over 45) nearing retirement.
- Physical manufacturing capacity can be rebuilt in a couple of years, but experienced technical workers cannot be trained or credentialed that quickly, creating an asymmetric bottleneck.
- Every credible forecast shows electricity demand continuing to climb through 2050, meaning the supply gap will not resolve on its own and will worsen without intervention.
Assumptions
- Flat demand from 2010-2020 was correctly interpreted by industry as justification for disinvestment, when it was actually a temporary 'intermission' rather than a permanent trend.
- The current demand surge (AI, data centers, reshoring, electrification) is durable and will continue rather than being a temporary spike.
- Rebuilding technical/human capital genuinely cannot be accelerated significantly through concentrated investment, immigration of skilled workers, or intensive training programs.
- Domestic manufacturing capacity and workforce development are necessary and sufficient solutions, rather than expanded imports, international partnerships, or demand-reduction strategies.
- The author's business interest (as CEO of a power transformer procurement company) does not bias the diagnosis or the urgency communicated in the article.