Driven By Alternative Fuels, Kentucky Leads in Fourth-Quarter Spending for Great Lakes Region

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Researched by Industrial Info Resources (Sugar Land, Texas)--For most of 2009, the Great Lakes region of the United States has seen lower-than-usual spending because of the down economy, particularly the troubled automotive sector, which calls the Great Lakes home. Typically, even in poor times, states such as Ohio and Illinois will continue to spend significantly on a quarterly basis since they have, outside of automotive-related projects, a wide base of spending. However, for the first time in many years, Kentucky is the front runner in spending for the coming quarter for the region, thanks to the Alternative Fuels Industry.

Click on image at right for a breakdown of planned industrial project starts in Kentucky in 4Q09.

In total, $2.9 billion in capital and maintenance project activity is scheduled to begin construction in October, November and December in Kentucky. While this is not a momentous amount of spending for the region, it is significant because the balance of the states that make up the region are lagging behind significantly for the quarter.

The Alternative Fuels Industry is the protagonist in the Kentucky spending drama, with three projects worth $2.34 billion scheduled to begin construction during the quarter. This high total can be almost entirely attributed to a single project, a proposed grassroot coal-to-diesel plant in Paducah. This project, which accounts for $2.3 billion of the $2.341 billion in spending for the industry, will produce, on its completion, 100,000 barrels per day diesel fuel from a coal feedstock.

While the Alternative Fuels Industry is certainly driving spending in the state for the coming quarter, other industries are also contributing to spending in the months to come. The Power Industry, typically the top spender in most quarters, will add $392 million in capital and maintenance projects to the mix, while the Chemicals Industry will contribute $86 million. Other significant spending industries include the Oil & Gas Storage Industry, with $70 million; the Food and Beverage Industry, with $22 million; and the Metals and Minerals Industry, with $8 million.

While these numbers certainly are not large, they are significant for Kentucky. With much of its typical annual spending attributed to the automotive sector, the state has struggled for about 18 months to come up with any significant spending at all. Typically, Kentucky falls into the second-to-last place in the region when it comes to total quarterly spending, outshining only Wisconsin.

While Kentucky's time to shine in the region may be brief, the state hopefully will make the most of it. Any spending is good spending, especially in these economically troubled times, and Kentucky can use all of the construction dollars--and more importantly the jobs, both temporary and permanent--that are associated with these projects. Hopefully, this will just be a jumping-off point for the state; once the automotive sector completes its recovery, sometime in either 2010 or 2011, more spending opportunities will emerge, something the state sorely needs to see happen.

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