Mid-Year Automotive Review: Over $6 Billion on the Books for Balance of 2005

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Researched by Industrialinfo.com (Industrial Information Resources, Incorporated; Houston, Texas). In early January 2005, we here at Industrialinfo.com produced an article with our early forecast of the North American automotive industry and how expenditures were expected to pan out for the year Automotive Anticipated to Broach $4.8 Billion in Spending for 2005 January 17,2005. Now that midyear has arrived, it is time to take another look at that industry and see if our early prognostications are holding true.

A mid-year reassessment of the industry shows that we were slightly off in our earlier analysis. This is the type of industry correction we like to see around here, a positive one.

In looking at the project activity in North America, both capital and maintenance, we now see that there are 227 active projects, worth over $6.5 billion on the books for the year in the automotive industry.

Click on the image at right to see a table showing a breakdown of this project spending by market region.

Ford Motor Company has taken over the spending lead, with over $1.5 billion in proposed projects for this year. General Motors, our leader at the beginning of the year, has maintained a hold on second place in spending, with just over $1.2 billion in proposed projects.

However, General Motors' recent announcement of 25,000 layoffs and an unspecified number of plant closures by 2008 throws those spending numbers for 2005 and beyond into a shadow. Will General Motors continue to spend capital when they are planning to lay off so many? Only time will tell if General Motors will continue its current spending plans, since the company is not talking about those plans publicly at this early stage.

As far as where this project spending is anticipated to take place, Ontario has slipped past Michigan as the big spender for 2005. Ontario currently has seven projects worth over $1.3 billion on its plate for 2005, while Michigan can boast more projects, 23, but with slightly lower spending, at $1.1 billion. Other states, such as Georgia (eleven projects worth $878 million), Ohio (thirteen projects worth $652 million), Alabama (twelve projects worth $406 million), Indiana (sixteen projects worth $390 million) and South Carolina (fifteen projects worth $293 million) have either maintained their level of spending or increased it for the year.

When it is all said and done, 2005 is shaping up to be an improvement when compared to 2004's spending for the automotive industry. There are currently more projects worth even more money in the planning stages across the industry, and the number of projects that have reached the approval stage and moved into the engineering or construction phase is also on the rise. While the industry is still struggling with layoffs, bankruptcies, and plant closures, the spending signs are nevertheless looking positive. The only real question at this point is if this spending level can be maintained for the balance of the year and into the next few years, or if the industry will be forced, at some point, to curtail its spending because of the troubles manufacturers find themselves in at this time.

For a more detailed look at Industrialinfo.com's Automotive Database, please visit our webpage. This database is the comprehensive collection of over 1,400 operational, planned, engineered, and under construction OEM and tier supplier plants in the automotive industry, as well as all of the capital and maintenance projects associated with these plants, both grassroot and operational.

Industrial Information Resources (IIR) is a Marketing Information Service company that has been doing business for over 22 years. IIR is respected as a leader in providing comprehensive market intelligence pertaining to the industrial processing, heavy manufacturing, and energy-related industries throughout the world.