Rolls-Royce powers data center growth with increased investment in U.S. manufacturing

• $24 million investment in Mankato, Minnesota, will more than double production and create jobs
• New facility to help meet record demand for data center backup power generation systems
• Engines and complete generator sets manufactured in U.S.

Rolls-Royce (LSE: RR., ADR: RYCEY) is today announcing a $24 million investment in Mankato, Minnesota, that will more than double production of backup power generation systems for data centers and create more than 100 American jobs.

The investment includes a new 2.5 hectare Logistics Operations Center (LOC) located adjacent to the company’s existing manufacturing facility. It will enable Rolls-Royce to increase production capacity for its mtu Series 4000 generator sets, which are in high demand from the rapidly growing data center industry.

Rolls-Royce is investing significantly in its U.S. operations. This expansion of Mankato builds on the more than $1 billion Rolls-Royce has invested in the U.S. over the past decade. 

Tufan Erginbilgic, CEO, Rolls-Royce, said: “The U.S. market is very important to Rolls-Royce. We have a proud history in America and we are committed to strengthening our presence to support further growth, bringing economic benefits and job opportunities. Today’s announcement is proof of the transformation of Rolls-Royce in action, enabling us to invest in areas of strategic focus, such as power generation.”

Rolls-Royce anticipates production at the Minnesota facility will increase by more than 120% by 2026 as compared to last year, with further growth expected in the future. The LOC is expected to become operational next spring, with new jobs created over the next three years.

The generator sets use mtu Series 4000 engines that are currently built at the Rolls-Royce facility in Aiken, South Carolina. The Aiken facility is also expected to see an increase in engine production, resulting in a further increase in headcount to keep up with demand.

This investment supports the strategic ambitions of Rolls-Royce to profitably grow the power generation operations of its Power Systems division. Last year sales of power generation products for the data center segment grew almost 50%. The U.S. leads the data center market, with more than half of the world’s hyperscale data centers located in the country. As much as $1 trillion is expected to be spent in the U.S. on AI data centers, components, and associated infrastructure over the next few years.

Joerg Stratmann, CEO of Power Systems, Rolls-Royce, said: “Our hyperscale data center customers have relied on our solutions and partnership for mission critical power for over 15 years – a result of our strategic focus and continuous investment in this sector. This deliberate market positioning has enabled us to effectively address the exponential rise in demand from the data center industry, particularly in the U.S. where this critical new infrastructure will be built.”

The LOC will provide additional capacity for both logistics and assembly operations for the Mankato plant, which exclusively manufactures power generation systems. It also supports the company’s firm commitment to safety by allowing all logistics and assembly activities to be conducted in climate-controlled environments, even with the significant increase in throughput. The LOC offers the development of future capacity and capabilities as the energy landscape continues to evolve.

Since acquiring the business in 2007, Rolls-Royce has continued to invest in its manufacturing operations at the Mankato site, most recently completing a $13.9m expansion of the main manufacturing site and the addition of a research and development center in 2021.