Industrial Manufacturing Industry Increases Spending in Third-Quarter 2010

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Researched by Industrial Info Resources (Sugar Land, Texas)--The difficulties faced by the Industrial Manufacturing Industry during the recession were varied and numerous. The loss of hundreds of plants and tens of thousands of jobs, and the rapid slowdown of spending are evidence of an industry in flux. The slow return of spending during the past year has shown that companies are taking a very careful and cautious approach to recovery. During the first quarter of 2010, only $2.9 billion in construction starts were planned, while that number decreased in the second quarter to $1.9 billion. However, as the signs of overall economic recovery have increased across the United States, the companies that make up the Industrial Manufacturing Industry have reacted in kind, loosening the strings on their respective pocketbooks and showing a willingness to again spend money. This confidence in the overall economic recovery in the U.S. has led to $7.1 billion in planned construction starts for the industry during the third quarter of 2010.

Click on image at right for a regional breakdown of third-quarter Industrial Manufacturing project starts in the U.S.

Industrial Manufacturing construction activity was expected to increase during the summer, as favorable weather conditions make this time of year prime for construction across the country. The sectors that make up the industry are obviously very confident in how the overall economy is recovering, as evidenced by the jump in planned spending for the quarter. Sectors, such as automotive and heavy manufacturing, are stabilizing after more than a year of almost pure anarchy, enabling the leadership within those sectors to feel a level of comfort in spending that they have not had for almost two years.

The Rocky Mountains region of the country will see the most spending during the coming quarter, $2.4 billion, thanks to a pair of commuter rail projects that account for almost $2 billion of that total. The Northeast region, at $1.3 billion in total planned construction starts, is the second-highest spending region for the quarter, while the region with the most overall projects, the Great Lakes region, comes in third place, as its 64 capital and maintenance projects account for an additional $874 million in spending. The Midwest and Southeast regions round out the top five for the quarter, with $765 million and $604 million in total spending, respectively.

The 20 largest projects for the quarter, in terms of total investment, represent a wide variety of sectors. The aforementioned rail projects are some of the largest. Other key projects include grassroot solar cell manufacturing plants, automotive parts plant expansions, grassroot lithium ion battery manufacturing plants, and port projects. Having such a wide variety of sectors to pull from is both a strength and a weakness for the Industrial Manufacturing Industry. Regardless, the significant increase in spending that is expected to occur is a sign that companies in the industry are again willing to spend significant money in the U.S. as the recession winds down.

Overall, the increase in spending is certainly a positive sign for an industry that has struggled mightily during the recession. As the number of projects, along with the total value of those projects, continues to increase, sector after sector is slowly regaining its feet and returning to profitability. Another result of this spending will certainly be an increase in jobs created within the industry, an industry that suffered the largest job loss numbers in recent memory because of the recession. Provided the economy continues on its path to recovery, we should see spending of this nature continue with the overall value increasing slowly in the months to come. Hopefully, by the summer of 2011, the industry will have recovered to pre-recession spending levels and everyone can move forward.

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