Rate of U.S. Plant Closures Remains Strong Throughout 2011

---

Researched by Industrial Info Resources (Sugar Land, Texas)--Two years ago, when the country was knee-deep in the recession, plant closings were seen daily. Companies were struggling to remain in business, and cutting back the number of operational plants was a key part of that strategy. As the recession ended, it was expected that the practice of closing plants would slow down to more normal levels. However, this has not been the case. For various reasons, the rate of plant closures in the U.S. throughout 2011 has remained strong.

Through the first half of 2011, a total of 176 plants were officially closed in the U.S. Another 84 plants have either closed since July 1 or will close by the end of the year which, if these are all of the plants that close this year, will mean that 260 manufacturing plants will have closed during 2011. However, it is highly unlikely that the number of plants closing will remain that low, as the decision to close additional plants is being made each and every month. Realistically, as many as 300 plants could end up being closed by the end of 2011, but that estimate probably will be on the low side as well.

The Industrial Manufacturing Industry has the unenviable honor of being the leader in total plants closed or scheduled to close in 2011. To date, the Industrial Manufacturing Industry has either closed or is scheduled to close 108 plants this year. This rate of closure is not exactly unexpected in this industry, considering the damage that occurred to its companies during the recession. Many of the companies in the Industrial Manufacturing Industry are still in the process of rebuilding their base businesses as they attempt to recover from the recession and deal with a very unstable U.S. economy.

Other industries contributed significantly to the number of closed or closing plants during 2011. The Food & Beverage Industry will have seen at least 39 plants close by the end of the year, and that number will probably increase before the year is over. The Pulp & Paper Industry is expected to see at least 28 plants close by December 31 this year, while the Pharmaceutical & Biotech Industry will add a minimum of 27 plants, and the Metals & Minerals Industry will contribute at least 26 additional plants. Closures were slower in the Power Industry, which is expected to see at least 15 plants close this year, and the Chemicals Processing Industry, which will have at least 13 plants close their doors.

These closures have been occurring across the country. The Great Lakes region will take the largest hit, with 50 plants either already closed this year or scheduled to close their operations by the end of the year. The Mid-Atlantic region will add a minimum of 41 plants to that total by year's end, while the Southeast region will see 37 plants close and the West Coast another 32. The Midwest region, along with the New England region, the Northeast region and the Southwest region, will all have more than 20 plants that close this year as well.

These closures are a source of worry in a time of high unemployment in the U.S. As a result of the plants that have closed and those scheduled to close by the end of 2011, more than 42,000 jobs will have been lost. This at a time when jobs are at a premium and the country's leadership is trying to find ways to create jobs. By the time the year is over, unemployment will have been further affected, as more plant closures certainly will be announced in the coming months. Given the erratic economic situation in the U.S., it is not surprising that these closures are taking place, but repairing the economy will involve keeping plants open rather than closing them. It will be months and possibly years before the unemployment situation is under control again and the additional closing of plants does nothing to help that situation. But in many cases, it is the only thing that makes sense for a company that is struggling to make ends meet.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy markets. IIR'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.