U.S. Industrial Manufacturing Industry Completes $7 Billion in Construction Activity in 2Q08

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Researched by Industrial Info Resources (Sugar Land, Texas)--The first half of 2008 has not been kind to the Industrial Manufacturing Industry in the United States. The housing market crash, rising oil and gas prices and a weak dollar have caused the majority of the sectors in the industry to cut back on spending as they re-examine the landscape. However, primarily because of several large projects that completed lengthy construction periods, the industry had just less than $7 billion worth of capital and maintenance projects reach completion during the second quarter of the year.

The Rocky Mountains region led the way last quarter with $2 billion worth of projects that completed construction. The primary reason for that level of expenditure, which is typically uncommon in the region, was the completion of a $1.5 billion semiconductor plant-conversion project that began construction in 2007 in New Mexico. The Southeast region was a close second with $1.8 billion of completed projects within its states. The top project reaching completion in that region was a $700 million automotive assembly plant retool in Tennessee. Rounding out the top five regions was the Great Lakes region with $1.2 billion in completed projects followed by the Mid-Atlantic region at $515 million and the West Coast region at $393 million.

Some of the other key projects that completed construction during the quarter include a $490 million grassroot Phase I commuter rail project in Utah, a $270 million vehicle engine manufacturing plant addition in Alabama, a $185 million engine control unit plant expansion in Tennessee, a $120 million container terminal wharf expansion in Virginia, and a $106 million Phase I commuter rail expansion in Georgia.

Although this spending boost was much needed, the third and fourth quarters don't look to be as pleasant in terms of spending and projects reaching fruition. Spending has been drastically cut across the board in the industry, as all sectors are feeling the crunch. Many projects that would have been scheduled to complete construction during the last half of the year have been postponed, delayed or canceled as a result of the severe downturn in the economy.

Spending in the industry is certainly declining, which means not only less project activity in construction starts and completions, but also a reduction of new jobs. Not only will the construction industry suffer as there will be less construction jobs, but there will also be less permanent manufacturing jobs. The only hope is that this severe economic downturn is relatively short and manufacturing will get back on track by early 2009. However, all signs point to that not being the case, especially within the mammoth automotive sector, which is facing some of the most critical decisions it has had in decades.

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