Capital and Maintenance Spending Improves Greatly in Michigan

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Researched by Industrial Info Resources (Sugar Land, Texas)--One of the hardest-hit states in the recession was Michigan. The old saying, "Will the last one to leave Michigan turn out the lights," which first made its rounds as a joke punch line in the late 1970s and early 1980s, was dusted off and rolled out again in the past few years, as businesses and consumers fled the state seeking the proverbial "greener grass" in other states. The total collapse of the automotive sector at the end of 2008 put the nail in the state's coffin, as entire neighborhoods of Detroit became virtual ghost towns, real estate prices plummeted and unemployment skyrocketed. However, the state has been fighting back, finding ways to attract new business to the state, creating jobs. Spending has slowly been improving and in 2011, and this trend has gained some significant momentum.

In 2010, total capital and maintenance spending was $4.5 billion for the year in Michigan. This spending was concentrated in three key industries: the Power Industry, the Industrial Manufacturing Industry and the Metals & Minerals Industry. The key to regaining much of what has been lost in the state rests with the Industrial Manufacturing Industry, with its heavy base of automotive and heavy manufacturing companies that have traditionally made their home in the Great Lakes region. With Industrial Manufacturing spending comes spending in other industries, especially the Power Industry.

In 2011, the state's projected capital and maintenance spending is almost double that of 2010. Industrial Info Resources is currently tracking $8.3 billion in capital and maintenance projects that either have begun construction or are scheduled to begin construction this year in Michigan. This total is expected to increase as the year progresses and should top the $9 billion mark before the end of the year. Like last year, the focal point of spending in 2011 once again revolves around three key industries, but with one difference: the Alternative Fuels Industry has replaced the Metals & Minerals Industry as a major spender in the state in 2011.

The Power Industry is projected to see $4.1 billion in capital and maintenance projects begin construction this year in Michigan. The most significant of the power projects scheduled to begin construction this year in the state is a proposed $2.8 billion, 765-kilovolt grassroot transmission line that will run 700 miles across the state. The Power Industry will also see a number of windfarm projects begin construction this year, as well as various coal-fired power projects in the state. As more business returns to the state, more power will certainly be needed, and power projects in the state could increase in the coming years as a result. Of the Power projects being tracked for 2011 by Industrial Info, only $57 million have already begun construction, with the balance scheduled to begin construction between May and December.

The Alternative Fuels Industry is currently scheduled to see $1.5 billion in capital and maintenance projects begin construction in the state this year. The most significant Alternative Fuels project scheduled to begin construction this year is the proposed $1.4 billion grassroot coke-to-crude plant that is currently scheduled to begin construction this summer. A number of other ethanol and biogas projects are also scheduled to begin construction later this year. While their numbers are not large, Alternative Fuels projects are expected to be a key part of the state's recovery process for years to come.

The Industrial Manufacturing Industry will see $1.5 billion worth of investment in the state of Michigan in 2011. Nearly $900 million worth of industrial manufacturing projects have already begun construction in the state with an additional $650 million currently scheduled to begin construction later in the year, while new projects are added each and every month. With the increased interest in green energy sources such as solar and wind power, companies that manufacture equipment related to these booming technologies have made the state of Michigan a home. In addition, as the automotive sector has recovered, spending within that key sector has increased dramatically in Michigan, resulting in many jobs being added. One of the major projects driving Industrial Manufacturing spending in the state this year will be the proposed $371 million grassroot light rail line in Detroit that is scheduled to begin construction later this year. Spending is also anticipated in the lithium-ion battery arena and numerous facilities that manufacture automotive supplies.

While spending in the state has not yet risen as high as some of the surrounding states in the Great Lakes region, Michigan is obviously making a comeback by finding niche areas where it can attract new business. The state is slowly rebuilding, once again, from significant economic disaster and looks to be on the way to a recovery. It is going to take a few more years before the state can get back to the levels of spending that were more normal before the recession and collapse of the automotive sector, but progress is made each and every month. Lights are being turned back on once again in the state, and it looks like they are going to stay that way.

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