Grassroot Project Activity Increasing in United States

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Researched by Industrial Info Resources (Sugar Land, Texas)--For the past two years, companies have slowed down their expansion plans because of the erratic economy in the United States. This has meant that grassroot project activity has, arguably, suffered the most during this time period. With the economy in turmoil, companies have focused their efforts on consolidating operations and watching costs closely, rather than the more freewheeling type of expenditures the country had become used to in recent times. However, as the overall economic situation has begun to stabilize, companies are once again investigating more grassroot project opportunities, and as a result grassroot project activity has begun to increase in the U.S.

Click on image at right for a regional breakdown of planned fourth-quarter U.S. grassroot projects.

While some industries have been affected more severely by the recession, spending has been more closely monitored across the board. During the first quarter of 2010, only 69 grassroot projects began construction in the U.S. These projects represented $6.5 billion worth of project activity. During the second quarter, this number increased to 140 grassroot projects worth an estimated $12.1 billion beginning construction. In the third quarter, as the economy continued its recovery, even more grassroot projects began construction, increasing the total grassroot projects to 200 and increasing the total investment for the quarter to $29.4 billion.

Looking ahead at the proposed grassroot project spending for the fourth quarter, the grassroot project activity will once again increase. The total projects planned, as of this time, are similar to the third quarter, with 223 grassroot projects currently scheduled for a fourth quarter construction start. However, the total investment for the quarter is expected to increase dramatically with the aforementioned projects having a current estimated total value of $40.9 billion.

Several regions of the country will benefit from this grassroot spending trend in the coming quarter. The Great Lakes region, the Rocky Mountains region and the West Coast region will all see 36 grassroot projects begin construction during the fourth quarter. All three of these regions have suffered during the recession, and this level of project activity will be greatly appreciated. The Rocky Mountains region will see the largest total investment at $13 billion, while the West Coast will receive $9.9 billion in grassroot project activity. The Great Lakes will see $3.8 billion in grassroot construction starts.

As with most quarters, the Power Industry is expected to be the prime source of grassroot project activity for the fourth quarter. Currently Industrial Info is tracking 64 grassroot projects worth an estimated $24.2 billion within the Power Industry that have a fourth-quarter construction start date. The Alternative Fuels Industry is a distant second in total investment with 50 grassroot projects worth $7.7 billion scheduled for construction starts during the quarter, while the Industrial Manufacturing Industry will contribute $2.9 billion, in the form of 20 projects, to the mix.

This gradual increase in grassroot project activity across the U.S. is a positive sign for the country and its overall recovery from the devastating recession. If companies did not feel that the economy was recovering at a steady pace, they would not be willing to invest this kind of money in new facilities. The focus is shifting away from maintaining or expanding older facilities to building new facilities now that the economy is improving. This trend should continue into 2011 and beyond as the nation gets back on track, which will also lead to thousands of additional jobs being created which, in turn, will only help the recovery. While the U.S. is still a long ways from returning to its pre-recession glory, companies are taking the right steps in a positive direction and will continue to do so in the months to come.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR'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.