U.S. Great Lakes Region Begins 2013 on Positive Note

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Researched by Industrial Info Resources (Sugar Land, Texas)--During the recent Great Recession, the U.S. Great Lakes region arguably suffered more than any other region of the country, thanks to its heavy blue collar workforce and its reliance on both the heavy manufacturing and automotive sectors. However, once the economy began to turn around, the region has been improving rapidly. In part, this can be attributed to the meteoric rebirth of the automotive sector, but many other sectors have been rejuvenated over the past two-plus years thanks to reorganizations. Looking ahead to the first quarter of 2013, it appears that the Great Lakes region is going to begin the year on a positive note as spending continues to improve across the region.

Click on the image at the right for a graph detailing construction starts in the Great Lakes region in the first quarter of 2013.

Industrial Info is currently tracking $20.5 billion worth of projects, including both capital and maintenance projects, that are scheduled to begin construction during the first quarter of the year in the region. This is a significant amount of work during a time of the year in which spending typically slows due to weather concerns. However, much like last year, the winter has been mild thus far, which is one of the reasons spending appears to be robust this early in the year. Spending for the quarter could certainly increase as well, provided the weather remains mild and companies make swift decisions on expenditures.

Having a solid first quarter can only benefit the region as the year progresses. While spending slowed at the end of 2012, thanks to both the presidential election and the fiscal cliff debate, companies are beginning to open their pocket books in the region. However, one thing that could curtail spending around the end of the quarter is the second major fiscal debate. As Congress only passed a partial solution to the fiscal cliff problem, it will take another stab at it around the end of March and in April, which will certainly lead to some instability in proposed spending as many companies will want to see what measures and solutions are passed before allocating more funds. Hopefully, Congress will pass legislation that will solve these issues once and for all, but it is going to be a tough sell over the next several weeks and companies may be reluctant to increase spending until the issue is solved. This would certainly affect spending during the second quarter and beyond.

During the first quarter, however, proposed spending is spread around the region. Kentucky is expected to lead the charge with more than $8 billion in proposed project activity in January, February or March, while Illinois and Indiana will both top the $3 billion mark. Michigan and Ohio will see a smaller portion of project activity with spending reaching $2.8 billion in Michigan and only $1.9 billion in Ohio, while Wisconsin, a state that consistently struggles to reach the top of the ranks in the region, is expected to see $800 million in project spending.

The Alternative Fuels Industry is expected to be the largest spender for the quarter, with $11.6 billion in projects expected to begin construction. However, some of these projects remain in doubt thanks to a weak market. The Power Industry, always a major player in the region, is expected to see $5.3 billion in projects begin construction during the quarter as well. The balance of the industries are all looking at less than $1 billion each in total spending for the first three months of the year, but those amounts could increase. The Industrial Manufacturing Industry comes closest to the $1 billion mark with $927 million in planned projects, while the Metals & Minerals Industry, another industry that traditionally does well in this region, clocks in at $789 million.

While proposed spending for the region during the first quarter appears to be robust at this point, not all of the projects currently planned will reach the construction stage; with the fiscal cliff issue still in doubt, others may be delayed or canceled as well. However, the projected spending is certainly a solid number for a region that has seen project activity severely hampered by the elements in the past. Hopefully, the weather will hold and Congress will solve the issue with minimal politicking and delay, although that is unlikely thanks to the polarization in Washington. Regardless, the second quarter should look better and the third even better when it comes to spending, as the region enters the prime construction time of spring, summer and fall.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info's quality-assurance philosophy, the Living Forward Reporting Principle™, provides up-to-the-minute intelligence on what's happening now, while constantly keeping track of future opportunities.