Detroit Area Future Spending Remains Solid Despite Automotive Woes

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Researched by Industrial Info Resources (Sugar Land, Texas) -- A little over a year ago, we analyzed future spending in the Detroit area. At that time, just over $2.2 billion worth of project activity was in the planning stages for the area, a healthy number, especially with the automotive market being as volatile as it was at the time. Fast forward a little over a year and we see an even more volatile automotive market with Chrysler LLC (Auburn Hills, Michigan) being reborn, all three of the American automakers knee deep in cost cutting negotiations with the UAW (United Auto Workers) on a new contract and with the foreign automakers taking more then 50% share of the lucrative American automotive market for the first time in history. However, at the same time, a look at future spending for the area shows a modest increase in proposed capital and maintenance work with $2.6 billion in active project work in the planning stages.

Click on the image at right to view a chart showing the breakdown of industrial project spending in the Detroit area.

The three counties that make up the Detroit region in Michigan, Wayne, Macomb and Oakland, have long relied on the automotive industry to provide jobs as well as spending opportunities. While auto is still king in the area, with the Industrial Manufacturing Industry claiming the lion’s share of the future spending with $1.4 billion in project activity, other industries are also showing some nice spending numbers.

The Power Industry has just under $500 million worth of projects that are planned for the area and the Refining Industry is not all that far behind with an additional $370 million. The Pharmaceuticals & Biotechnology Industry is showing some modest spending as well with $156 million in activity while the Chemicals Industry is in a similar situation with $140 million currently on the books.

As with most years, Wayne County accounts for the bulk of the active project activity in the area with $2.3 billion in future spending slated to take place within its borders. Some of the key projects in the area that are driving this spending include a pair of Chrysler LLC projects, a grassroot engine plant and an assembly plant paint shop retool , that combined, account for just over $1 billion of the future spending totals for the area. The real question when it comes to these projects is if they will survive whatever, if any, restructuring of capital plans that the newly reborn Chrysler decides to do in the coming months.

In addition to that pair of projects, there is the proposed $270 million 775MW coal station SO2 control install (FGD) within the Power industry, a truck assembly plant retool valued at $208 million within the Industrial Manufacturing industry, and a $150 million school of medicine multidisciplinary research building addition within the Pharmaceuticals & Biotechnology Industry.

While the Detroit area is not seeing the type of project activity it once enjoyed during the heyday of the automotive industry, significant spending is still being planned. The next 6-8 months will be key to how some of those automotive related spending opportunities pan out as the automakers continue to struggle to cut costs, and as a result jobs, in the area. However, other industries are also spending significant dollars in the area as well. It may not translate into as many jobs as the area is used too but there is activity there and that will mean construction related jobs in the future, which will be welcomed with open arms.

Industrial Info Resources (IIR) provides marketing communication services ranging from industrial database solutions to market forecasting, custom analytics, and specialty promotions that support high-level image campaigns.