Rate of Plant Closures in Industrial Manufacturing Industry Begins to Ease

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Researched by Industrial Info Resources (Sugar Land, Texas)--Throughout the 20 months that the U.S. has been entrenched in the recession, plant closures within the Industrial Manufacturing Industry have become an almost daily occurrence. Even before the recession officially began, plants were closing, primarily because of the faltering automotive sector. However, the rate of plant closures in the U.S. has recently shown signs of easing as the country and the industry wind down 2009 and begin preparing themselves for the challenges of 2010.

Click on image at right for a regional breakdown of Industrial Manufacturing plant closures from 2007 through 2009.

The automotive sector has played a major role in the number of plant closures in the past two years. With both General Motors Corporation (Detroit, Michigan) and the Chrysler Group LLC (Auburn Hills, Michigan) entering and exiting bankruptcy proceedings this year, plant closures were inevitable. The effect the automotive sector has had on the manufacturing industry as a whole is nowhere more evident than when examining where the majority of the plant closures have been occurring since 2007.

The Great Lakes and Southeast regions of the country account for more plant closures since the beginning of 2007 than any other regions. These regions also account for more lost jobs as a result of these closures. The Great Lakes region has seen 166 plants close during this time, with the loss of more than 75,000 jobs. The Southeast region has closed 106 plants at a cost of almost 30,000 jobs. These regions are heavily reliant on the automotive sector, particularly the Great Lakes region.

Other regions of the country have also suffered since the beginning of 2007. The Mid-Atlantic region, encompassing the states of North Carolina, South Carolina, Virginia, West Virginia, and Maryland, has seen 80 plants close, causing the loss of 21,000 jobs. The Midwest region--the states of Minnesota, Iowa, Missouri, Nebraska, Kansas, South Dakota and North Dakota--added another 48 plants and 16,000 jobs to the mix. The Northeast region, which includes the states of New York, Pennsylvania, Delaware and New Jersey, closed 47 plants at a cost of 14,000 jobs.

The number of plant closures is beginning to slow. In 2007, 209 plants closed in the U.S., accounting for more than 67,000 jobs. In 2008, these numbers increased to 252 plants and 92,000 jobs. However, 2009's numbers are looking a little better. Including plants that are scheduled to close before the end of the year, only 127 plants are known to be closing in 2009, representing 43,000 jobs.

While these numbers are not as low as everyone would like, they do show improvement. As the country wallows in 9.4% unemployment and millions remain out of work, any sign that industry is not closing additional plants is positive. Hopefully, as we enter 2010, the plant closures will continue slowing to a more acceptable number. Obviously, plant closures will never stop completely, but they can be reduced to a small trickle.

With many signs pointing to some form of economic recovery in 2010, the rate of plants closing should continue to slow. As industry begins to regain confidence in the economy and as financing begins to become more readily available, more plants should be developed and more jobs created to help offset the losses of the past few years.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.