Plant Closures in U.S. Industrial Manufacturing Industry Expected to Remain High in 2013

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Researched by Industrial Info Resources (Sugar Land, Texas)--Prior to the recent Great Recession in the U.S., plant closures occurred on a limited basis in the Industrial Manufacturing Industry. However, the Great Recession changed all that and has made closures a massive business that is thriving across the country. Between January 2008 and December 2012, the Industrial Manufacturing Industry closed nearly 1,500 manufacturing plants, which resulted in the loss of more than 367,000 jobs. Looking ahead to 2013, it appears as though closures will remain strong as the industry continues to adjust for the new economic and manufacturing reality that the recession spawned.

Industrial Info is currently tracking 35 U.S. industrial manufacturing plants that are scheduled to close in 2013. These closures will result in at least another 14,500 manufacturing jobs lost. As the year develops, additional closures will be planned that will boost the number significantly. In 2012, 171 manufacturing plants closed their doors, resulting in more than 37,500 jobs lost for the year. This was actually an improvement over 2011, when 208 plants ceased operations, which cost workers another 41,500-plus jobs.

In 2012 and 2013, three regions of the country have or are expected to see the largest number of closures. The Great Lakes region saw the highest concentration of closures in 2012 and is expected to do so again in 2013, with 50 plants closing last year and another 15 scheduled to close in 2013. In 2012, that region saw another 13,000-plus jobs disappear, while only 1,800 are slated to be lost in 2013. The Mid-Atlantic region and the region each are currently scheduled to have six plants close in 2013, which will result in 11,000 jobs being lost. In 2012, those regions combined for 47 plant closures, with 24 occurring in the Southwest region. In 2011, the Great Lakes region once again led the way with 55 plants closing and the loss of 12,800 jobs, while the Southeast region saw the second-highest number at 34 with 5,900 jobs lost, and the Mid-Atlantic was in third place at 24 plants closing and 4,200 jobs lost.

Plant closures have become a booming business across the country, with companies that specialize in dismantlement, demolition, equipment sales, land sales and cartage of equipment coming to the forefront. Millions have been made since the beginning of the recession in these areas as the numbers have continued to grow across the U.S. These closures also have provided opportunities for companies that are still operational to save money on expansions. With thousands of empty plants all over the U.S., it makes sense for companies that are expanding to look to those empty plants rather than construct a grassroot plant.

The purchase, renovation and upgrade of formerly closed plants has been another business that has boomed in the post-recession U.S. Real estate agents that specialize in selling industrial property have had an abundance of facilities to list nationwide, which has made it a buyer's market. In any given city in the U.S., there can be hundreds of formerly operating plants available for purchase, which can cut the costs associated with opening a new facility significantly. Smart companies have taken advantage of this and are slowing down grassroot construction in favor of purchasing a vacant manufacturing plant and upgrading it to their own needs at a significantly lower cost.

The trend of plant closures in the Industrial Manufacturing Industry is not one that is likely to disappear in the near future. Companies believe they can produce more with less and have streamlined, but expansion remains a key part of any business' plan for the future, and these vacant manufacturing plants can mean the difference between spending $10 million or more to build a new plant and only having to invest half that amount to increase production by a significant margin.

Expect to see the total closures within the Industrial Manufacturing Industry in the U.S. to rise throughout 2013 and come close to meeting the numbers we saw in 2012. While the total number of closures appears to be slowing on an annual basis, it is not slowing very rapidly, and this area of the industry should continue to provide big rewards for those companies involved in both closures and the purchases of empty plants for future production.

Industrial Info Resources (IIR), with global headquarters in Sugar Land, Texas, and eight offices outside of North America, is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. Industrial Info'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.