Across industrial markets, order backlogs have stretched from months into years. Grid expansion projects stall as utilities wait 2-3 years for transformers and switchgear, and up to five years or more for gas turbines. Shipyards struggle to expand output despite growing demand. The pattern repeats across many other sectors as well, and the conventional explanations of fragile supply chains, scarce skilled labor, and years of underinvestment in manufacturing capacity are real, but a highly persistent driver of industrial backlog is often unexamined: complexity.
Industrial backlogs are not just a supply chain problem; they are a complexity problem. Over the past two decades, industrial products have become sophisticated systems integrating advanced materials, digital controls, software, sensors, and increasingly demanding regulatory requirements. Each improvement is justified on its own merits, but collectively they impose what might be called a complexity tax: a growing burden of engineering hours, qualification processes, supplier coordination, testing, documentation, and integration work that consumes productive capacity without adding a single unit to output. This tax does not appear on an income statement, but it is paid every day.
The price of progress
Modern gas turbines illustrate how increased complexity is feeding into longer delivery timelines. Today's turbines operate at higher temperatures, achieve greater efficiency, and incorporate digital monitoring systems that would have seemed extraordinary a generation ago. These are genuine advances. They also make turbines substantially harder to manufacture. Advanced components require tighter tolerances. Specialized materials demand more complex production processes. Software systems must be integrated alongside physical hardware. Testing and validation requirements have multiplied. What appears on a purchase order as a single turbine increasingly represents an ecosystem of technologies that must function together without failure.
From turbines to transformers
Utilities across North America face long delays for transformers, switchgear, breakers, and other grid infrastructure. Demand is part of the story: electrification, data center growth, renewable energy projects, and grid modernization are all increasing equipment requirements simultaneously. Demand for generator step-up transformers has grown 274% since 2019, while standard power transformers now average 128 weeks for delivery, with some specialized orders extending to four years. (Wood Mackenzie, 2025) But the equipment itself has also become more complex.
Modern grid infrastructure now embeds digital controls, communications systems, and cybersecurity specifications alongside the traditional requirements of reliability and safety. Each addition was justified on its own merits. Together, they have substantially increased the engineering, manufacturing, and certification burden for equipment that, on the surface, looks much as it always has.
Before the pandemic, a large power transformer could typically be sourced in 12 to 14 months. (Wood Mackenzie / IEA, 2025) Lead times now exceed two years across most of the market, and some specialized units are running to four. A transformer is still a transformer. The effort required to design, certify, and deliver it is not.
Complexity compounds
When a product becomes more sophisticated, the complexity tax burden spreads across suppliers, engineers, installers, and regulators, each facing additional specifications, more interfaces, and more intricate systems to oversee. This helps explain why industrial markets continue to experience bottlenecks even after the acute disruptions of recent years have eased. The underlying challenge is not moving materials through a system, but rather it is managing accumulating complexity. The complexity tax challenge does not resolve on its own as supply chains normalize, and it continues to place pressure on manufacturers and production timelines.
The complexity tax doesn't stop at delivery
The complexity tax does not stop when equipment leaves the factory. For operators, it begins again the moment something needs repair. Plant technicians are unable to adequately diagnose & repair modern, highly complex equipment because they lack the institutional knowledge and product understanding held by the OEM.
The factories managing those repair queues are the same ones struggling to produce new equipment. Overhaul work, spare parts production, and new unit manufacturing compete for the same specialized labor, precision tooling, and constrained supply chains. Every complex asset commissioned today becomes a future repair obligation. As the installed base grows and each new generation of equipment arrives more sophisticated than the last, the maintenance burden will compound year over year. The factories and skilled staff under pressure today will face more demand for complex repairs tomorrow, not less.
The hidden productivity problem
Performance improvements rarely come without adding complexity. At some point, complexity grows faster than productivity gains can offset it. When that happens, effective capacity declines even as physical capacity holds steady. A facility producing the same number of units it produced a decade ago may be delivering substantially less output in economic terms, because each unit now requires significantly more work to design, build, test, and deliver.
This may be one of the defining industrial challenges of the next decade. Every capability added to a product carries a productivity cost. Early in a product's evolution, that cost is manageable: the performance gain outweighs the added burden. But as products mature and complexity accumulates, the relationship inverts. Each additional requirement delivers diminishing returns on performance while adding disproportionate weight to engineering, manufacturing, and certification processes. At some point, the curve tips. More complexity no longer means better products. It means slower ones. Industries that have spent decades on the left side of that curve, where performance improvements justified the added burden, are now navigating the right side, where complexity is outrunning the productivity gains that once absorbed it.
Managing the complexity tax
The most direct lever is investment in tooling and automation. Many industrial manufacturers still rely on engineering and production processes designed for a simpler era. Model-based engineering, digital twins, and automated testing environments can absorb significant complexity burden without proportional increases in labor. The upfront investment is real, but so is the productivity recovery.
Workforce development is equally important and frequently underestimated. Complex systems require workers who understand not just how to build a component but how it functions within a broader system. That kind of capability does not develop quickly. Companies that treat workforce investment as a cost to be deferred are effectively choosing to pay the complexity tax indefinitely.
Supply chain architecture deserves the same scrutiny. Long, fragile supplier networks amplify complexity rather than contain it. Manufacturers that have invested in closer supplier relationships, shared qualification processes, and tighter specification governance are finding that complexity becomes more manageable when the entire value chain is aligned around it rather than exposed to it.
Finally, product architecture itself is a lever that is rarely examined directly. Modular designs that isolate complexity within defined subsystems, rather than distributing it across an entire product, can substantially reduce the integration and certification burden. The most sophisticated products are not always the most complex ones. The best-engineered ones are those where complexity has been deliberately bounded.
The next competitive frontier
The industrial economy has spent decades optimizing for performance. The next competitive frontier may be optimizing for manageability: building the organizational capability to absorb complexity without losing productive output.
Complexity is not the enemy. It is the mechanism by which industry improves performance, raises efficiency, and expands economic capacity. The turbines, transformers, and industrial systems of the next decade will be more sophisticated than those of today, and that is as it should be. The problem is not complexity itself. It is complexity that arrives without the organizational infrastructure to support it.
The companies best positioned in the coming decade may not be those that simply build more capacity. They may be those that develop systematic approaches to complexity management: modular architectures that limit interface proliferation, qualification processes that scale, supply chain structures that absorb specification change without disruption, and engineering disciplines that treat complexity itself as a cost to be managed. The goal is not simpler products. It is ensuring that more sophisticated products do not silently degrade the ability to build, maintain, and operate them.
For industrial leaders, the complexity tax is not an abstraction. It shows up in missed delivery windows, stretched engineering teams, and qualification processes that take longer every cycle. The companies that recognize it as a structural cost and invest accordingly will be better positioned than those still waiting for supply chains alone to solve the problem.