Broad Range of U.S. Manufacturing Projects Planned for 2020 Despite Signs of Slower Growth

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Researched by Industrial Info Resources (Sugar Land, Texas)--Respondents in a recent quarterly U.S. manufacturing industry survey indicated they expect slower growth in capital investments next year.

Despite those expectations, Industrial Info is tracking more than $69 billion worth of U.S. industrial manufacturing projects that have a high or medium probability of moving forward as planned. A high-probability project has an 81% to 99% chance of breaking ground on schedule. Projects with medium probability have a 70% to 80% likelihood of beginning construction on time.

Click on the image at right for a graph showing planned high- and medium-probability U.S. industrial manufacturing project kickoff activity in 2020.

According to the results of the National Association of Manufacturers' (NAM) fourth-quarter 2019 outlook survey, which was conducted November 22 to December 6, the respondents expect 0.8% growth in capital investments over the next 12 months, down from 1.1% in the previous quarterly survey, and the weakest reading since the third quarter of 2016.

The survey received 287 responses, according to NAM. Despite the lower overall expectations of slower growth, 39.4% of the respondents indicated they anticipate higher capital spending next year, with 19.9% expecting investment growth of 5% or more. However, 20.9% anticipate capital spending to fall over the next 12 months.

"For this question, the smallest firms felt the most upbeat at 2.0% versus 1.0% for medium-sized and large manufacturers," NAM said. The association categorizes small firms as those with fewer than 50 employees, medium-sized firms as those with between 50 and 499 employees, and large manufacturers with 500 or more employees.

The expectations of lower capital spending growth fall in line with those of the Institute of Supply Management (ISM), which said earlier this month that U.S. capital expenditures in 2020 will drop by 2.1%, following 6.4% growth in 2019. The ISM follows 18 industries, ranging from food, beverage and tobacco products to chemical and paper products. For related information, see December 19, 2019, article - North American Industrial Project Spending Index Remains Up in November Amid Signs of Slowing Economic Growth.

Among the Industrial Manufacturing projects being tracked by Industrial Info that have planned kickoffs in 2020, the transportation systems sector has the spending edge, with more than $25 billion in planned investments. At the top of the spending list is the $8.5 billion expansion of the Chicago O'Hare International Airport. The project includes renovation of three existing terminals, increasing parking spaces for airplanes by 25%, construction of 35 new gates and replacing 40 existing ones, along with replacing a 55-year-old global terminal to make room for bigger airplanes. AECOM (NYSE:ACM) (Los Angeles, California) is providing architectural and engineering services. For more information, see Industrial Info's project report.

Distribution & warehousing sector projects planned for kickoff next year amount to more than $21 billion. This sector includes the data-center boom across the U.S. In Kansas City, Missouri, Google parent company Alphabet Incorporated (NASDAQ:GOOGL) (Mountain View, California) plans to construct a $600 million data center campus, to be located on an 80-acre site in the North Arlington Business Park. For more information, see Industrial Info's project report.

Automotive sector projects with planned kickoffs next year amount to nearly $6.6 billion in total investment value. In South Carolina, Volvo Cars of North America (Rockleigh, New Jersey) is planning a second-phase expansion at its 2,800-acre Ridgeville site. The expansion would include construction of a 100,000-square-foot manufacturing and assembly plant addition as part of the $1 billion project to add production of Volvo's S60 sedan at the site. For more information, see Industrial Info's project report.

For the fourth quarter, 67.6% of the respondents to the NAM survey reported a positive outlook for their companies, which is largely the same as the third-quarter survey results, but far below the 89.5% of those who signaled a positive outlook in the first quarter of 2019.

"Manufacturing in 2019 has been marked by slowing global growth, ongoing trade uncertainties and longstanding workforce shortages," NAM said in its survey report. "Indeed, while consumer spending, a rebounding housing sector and strong labor market growth continue to buoy economic activity, business investment and global trade volumes have each served as drags on top-line growth so far this year."

Going forward, passage of the United States-Mexico-Canada Agreement (USMCA) trade deal, a "phase one" trade deal between the U.S. and China, and long-term reauthorization of the U.S. Export--Import Bank stand to boost manufacturers' optimism, NAM said.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, six offices in North America and 12 international offices, 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. Follow IIR on: Facebook - Twitter - LinkedIn. For more information on our coverage, send inquiries to info@industrialinfo.com or visit us online at http://www.industrialinfo.com.