Industrial Manufacturing Industry Leaves Behind $29 Billion in U.S. Construction Starts in 2009

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Researched by Industrial Info Resources (Sugar Land, Texas)--By whatever accounting method one uses, 2009 was a down year for the United States on many levels. The economy imploded early in the year, the national unemployment situation took a significant hit, thousands of businesses downsized or declared bankruptcy, and the federal government struggled to take it all in and provide some kind of comforting solutions to the populace. Within the Industrial Manufacturing Industry most of the sectors spent the majority of the year fighting for survival. However, overall spending for the industry ended up being robust, with more than $29 billion in construction starts throughout the year.

Click on image at right for a breakdown by region of 2009 construction starts in the 2009 U.S. Industrial Manufacturing Industry.

The automotive sector was the most notable casualty of the recession in 2009. Both General Motors Corporation (GM) (Detroit, Michigan) and The Chrysler Group LLC (Auburn Hills, Michigan) were forced into bankruptcy proceedings by the federal government. As a result, Chrysler was taken over by Fiat SpA (OTC:FIATY) (Turin, Italy), and GM by the government itself. Spending within this key sector died during 2009. Cost cutting and job cutting was the name of the game for both automakers and their suppliers.

Sales also took a significant hit throughout the year. In the late summer, the government introduced the "cash for clunkers" program, which helped for a few weeks, but really did not change much. GM saw its sales fall 30% during the year, and Chrysler fared even worse. Only Ford Motor Company (NYSE:F) (Dearborn, Michigan), the only American automaker not to file for bankruptcy, managed to post positive sales numbers.

While the complete lack of anything resembling spending within the automotive sector set a down tone for the industry for the year, significant spending did end up occurring by year's end. As a result of the federal stimulus package, interest in rail-related transportation projects was at an all-time high, and spending increased in this area as the year progressed. The semiconductors and computers sector also popped in with some significant spending numbers during 2009, taking advantage of the down economy to do some large upgrade projects.

By the end of the year, despite its slow start, the Industrial Manufacturing Industry saw more than 500 capital and maintenance projects begin construction. These projects priced in at more than $29 billion in total expenditures for the industry during the year. While this was down from previous years, it was still a significant amount of spending given the economic situation.

The spending last year was spread fairly well across the country. Traditionally, the Great Lakes region had been a powerhouse in annual spending, but with the demise of the American automotive sector, spending took a significant dive in these states. By the end of the year, only $2.3 billion, in the form of just under 120 capital and maintenance projects, had begun construction in this very important region.

The top spending region for the year turned out to be the Rocky Mountains. Thanks to the renewed interest in commuter and light-rail spending, the Rockies states managed to come up with $6.7 billion worth of projects in 2009. The Northeast region of the country also saw some significant investment during the year. In this region, $5.5 billion in projects began construction last year.

Other key spending regions included the Mid-Atlantic region, with $3.9 billion in the form of 68 capital and maintenance projects, the Southeast region, with 83 projects worth $3.7 billion, and the Southwest region, with 53 projects worth $3.5 billion.

Overall, while spending was down from the pre-recession years, the industry did manage to end the year with a significant number of projects reaching the construction stage. As the economy continues its slow recovery, spending should only increase. In addition, as more funding becomes available for rail projects, spending in that arena should increase significantly. While 2009 may not have lived up to expectations in terms of overall spending, 2010 shows promise to be a much better year for the Industrial Manufacturing Industry.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.