Two Major Projects Account for Half of Great Lakes Region's $14.8 Billion in Fourth-Quarter Construction Starts

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Researched by Industrial Info Resources (Sugar Land, Texas)--The Great Lakes region of the United States was arguably the area hardest hit by the recession. The region is a bastion of blue collar work that relies on the automotive, aerospace and heavy manufacturing sectors for a large portion of its jobs. As the economy and the automotive sector simultaneously collapsed two years ago, the Great Lakes region saw thousands of jobs lost, with hundreds of plants closing and numerous companies going out of business. The state of Michigan was especially devastated by the economic situation that faced the nation. However, in recent months, spending has been gradually increasing in this embattled region as the economy has recovered. The fourth quarter of this year appears to be continuing this trend of recovery.

Click on image at right for a breakdown by state of planned fourth-quarter construction starts in the Great Lakes region.

Industrial Info is tracking $14.8 billion in capital and maintenance projects in the Great Lakes region that are currently scheduled to begin construction during the fourth quarter of 2010. Two major projects account for almost half of this spending, but in total, more than 250 projects will begin construction activities during the quarter, a significant improvement over the level of project activity the region saw only a year ago.

The largest project currently scheduled to begin construction in the coming quarter is a $5 billion decontamination and decommissioning project that will take place in Ohio. The project is being performed by the United States Department of Energy, which is expected to begin decontamination and decommissioning activities in October. The process will take 20 to 35 years to complete.

The other major project is a proposed $2.3 billion grassroot coal-to-diesel plant in Kentucky. This project will convert coal to 100,000 barrels per day of diesel fuel using a gasification process. Current estimates have construction beginning in November, with the plant coming online and beginning operations in the early summer of 2012.

While these two projects account for a large portion of the region's anticipated construction activity, construction will also begin on a number of additional projects. Spending is gradually recovering in the construction-starved Great Lakes states, and this means new construction jobs in areas where any new job is hailed as a victory. Eventually, these projects will lead to additional permanent jobs at the plants involved once construction is completed.

The states of Ohio and Kentucky are leading the way with the highest spending totals for the quarter, thanks to the two major projects. However, Illinois will see $1.9 billion in capital and maintenance spending, while Indiana will contribute $1.4 billion to the region's total for the months of October, November and December. Both Michigan and Wisconsin are still struggling to attract new business ventures and will see much smaller investments for the quarter.

The Chemical Processing and Alternative Fuels industries are leading the way for the quarter with $5.06 billion and $3.7 billion in total spending, respectively. However the Industrial Manufacturing Industry will see a healthy $2.6 billion in construction starts, while the Power Industry will contribute $1.3 billion and the Metals & Minerals Industry will see $938 million worth of capital and maintenance projects begin.

Overall, the Great Lakes region has quite a way to go if it is going to regain the prominence it lost during the recession. However, companies are certainly beginning to increase spending as the overall economic situation in the U.S. improves, and especially as the automotive sector rebounds. The winter is not typically a time of major construction activity, thanks to the inclement weather in the region, but significant activity appears to be poised to occur this winter. Hopefully, by next summer the Great Lakes region will see a significant improvement in total spending and jobs creation, and all of the states involved will be well on their way to recovery.

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