Aircraft Manufacturing Industry Driving Heavy Manufacturing Sector Spending in 2008

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Researched by Industrial Info Resources (Sugar Land, Texas)--The depth and breadth of the heavy manufacturing sector make it the most diverse of the sectors that make up the Industrial Manufacturing Industry. Covering wide ranging industries, such as the manufacturing of ships, turbine/generator sets, aircraft, railcars, construction machinery, farm equipment and air conditioners, the heavy manufacturing sector is really the backbone of manufacturing in North America. Without this sector, the Power Industry does not produce power, farms lie fallow, roads and buildings do not get constructed, mines shutdown, and the Oil & Gas Industry grinds to a halt.

Click on the image at right to view 2008 Heavy Manufacturing Section Project Spending Analysis Chart.

With this type of diversity, the sector rarely is slowed when it comes to annual spending. If one portion of the industry has fallen on hard times, another is sure to be booming. Traditionally, the heavy manufacturing sector can be counted on annual spending totals reaching into the $2 billion to $3 billion range. To date, just more than $1.8 billion worth of capital and maintenance projects are already expected to begin construction during 2008, a number that could easily triple as the year progresses.

In 2007, the bulk of the spending in this sector came out of the wind turbine manufacturing plants. For 2008, the aircraft and aircraft-parts manufacturing industries are providing the spending boost that is driving the sector's capital and maintenance budgets. Of the expenditures already scheduled for construction starts in 2008, $1.1 billion fall within the aircraft and aircraft-parts manufacturing industries.

Much of this aircraft-related spending revolves around small and midsize aircraft manufacturing plants being constructed this year. But also, several projects focus on the war between The Boeing Company (NYSE:BA) (Chicago, Illinois) and Airbus (France), a subsidiary of the European Aeronautic Defence and Space Company (The Netherlands), for control of the worldwide large aircraft market. In Mexico, Goodrich Corporation (NYSE:GR) (Charlotte, North Carolina) is expected to begin construction this year on a $92.5 million grassroot plant to manufacture nacelles for both the Boeing 787 and the Airbus A350 aircraft.

Some of the other key projects expected to begin construction this year that are not within the aircraft or aircraft-parts manufacturing industries include a proposed $100 million modular ship manufacturing building in Alabama, a proposed $100 million grassroots construction equipment manufacturing plant in Georgia, and a proposed $34 million wind turbine tower manufacturing plant in Iowa.

As to where this year's spending will occur, the bulk of this spending will take place in the Southeast region of the United States. This mainly is because of a single project, the proposed $600 million grassroot aerial refueling aircraft manufacturing plant that is in the planning stages in Alabama. This project is awaiting the award of the overall $40 billion program by the Department of Defense, a decision that is expected this year. Outside of that project, the region is playing host to an additional $344 million in heavy manufacturing sector spending in 2008.

Rounding out the top five spending regions are the Midwest region with $150 million in spending, yet the largest number of projects with 20, the Mid-Atlantic region with $143 million in spending, the Great Lakes region with $126 million in spending and Mexico with $104 million in spending.

Overall, spending remains strong within the heavy manufacturing sector as we enter the 2008 construction year. With many analysts maintaining the United States is heading for a recession this year, this sector in particular will be an excellent gauge on the North American economy as the year progresses. Spending totals should rise as the year moves on, and construction activity in other industries begin in earnest during the prime spring/summer/fall construction season. Demand for the heavy manufacturing sector's products, and hence spending activity within this sector, will be good indicators of the direction the economy as a whole will be taking by year's end.

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Industrial Info Resources (IIR) is the leading marketing information services company for the industrial process, heavy manufacturing and energy-related markets throughout the world. Celebrating its 25th anniversary, IIR provides accurate and timely intelligence featuring plant and project information databases, focused market databases, industry forecasting, key industry contacts, industry and territorial map products, direct marketing services and applications, and daily industry news.