Great Lakes Region Proved to be Great for the Chemical Industry in 2008

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Researched by Industrial Info Resources (Sugar Land, Texas)--Early last year the capital and maintenance spending outlook for the Chemical Processing Industry (CPI) in the Great Lakes region looked promising. Initial reports identified more than $700 million in total project activity planned to begin construction during 2008. Despite the grave situation of the automobile industry in the region, as the year came to a close several large CPI projects got under way, catapulting total CPI spending to an estimated $958 million from the nearly 100 capital and maintenance projects--a significant increase from construction starts in the region during 2007, which were nearly $680 million.

One of the biggest contributors to the 2008 increase in spending was Praxair Incorporated (NYSE:PX) who began construction of an estimated $300 million expansion of hydrogen production at its Whiting, Indiana, site last summer. PPG Industries Incorporated (NYSE:PPG) began construction of a fifth teslin production line at its Barberton, Ohio, plant last year, and this estimated $45 million facility is expected to start up soon. Airgas Incorporated (Radnor, Pennsylvania) began construction last summer for a new air-separation plant in Carrollton, Kentucky, to provide gases to the merchant market and locally to Dow Chemical's (NYSE: DOW) (Midland, Michigan) Carrollton silicon plant.

As the automotive industry of the region continues to battle through survival, the CPI plant owners in the region seem to be holding their own, with total investments for 2009 expected to near $600 million from another 100 or more projects. The CPI is a large employer in the region, boasting more than 832 operational plants and employing more than 89,000 people. Looking ahead at what project activity is on the horizon, some of the largest include plans by LyondellBasell North America Incorporated (Houston, Texas) to begin the first construction phase of a long-planned optimization of their olefins complex located in Morris, Illinois. This optimization combined with a planned maintenance turnaround of the complex in 2010 will cost an estimated $90 million to complete. These plans are moving forward despite the company's filing for bankruptcy last month. American Synthetic Rubber Company LLC, a subsidiary of Michelin Tire Corporation, is planning to move forward with a $50 million expansion of its Louisville, Kentucky, plant this summer.

These few projects show the overall strength of the chemical industry in the region and speak also to the outlook for the CPI in general. There is no debating this year will be amongst the most difficult that many have faced in decades, if ever. Despite the obvious current market constraints, there appears to be a consistent mood among most chemical plant owners to keep moving forward on projects already in progress, albeit maybe with little a more caution than before.

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Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services.