U.S. Industrial Manufacturing Maintenance Activity Returning to Pre-Recession Levels

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Researched by Industrial Info Resources (Sugar Land, Texas)--Throughout the recession, companies in the Industrial Manufacturing Industry in the United States actively sought ways of cutting back on expenses and reducing budgets to accommodate the changing business atmosphere. A large part of the changes made involved the closure of non-essential or redundant plants, which resulted in thousands of jobs lost. However, another method companies used to reduce costs was the reduction of routine maintenance activities at the plants that were kept operational. Traditionally, the majority of the companies in the industry perform maintenance twice a year; once during the summer, typically in July, and once in the winter, typically in December. These maintenance periods would usually coincide with the July 4 holiday and the Christmas holiday. During the recession, companies found that they could make do with performing major maintenance activities once a year, while performing minor maintenance more often. However, now that the recession is winding down and companies are returning to more traditional business practices, maintenance activity is picking up again.

Over the past two years, many companies chose to either halt or shorten their summer maintenance programs to cut costs. These maintenance cutbacks were most prevalent within the automotive sector, but the philosophy was practiced across all sectors to a certain extent. As a result of this reduction in major maintenance activity, minor maintenance was performed on the weekends and at times in the evenings. The minor work performed was along the lines of makeshift work that was designed to keep production lines operating as efficiently as possible without going through the expense of a major shutdown.

This reduction often meant that during the major shutdown in winter, now the only major maintenance period for the year, took longer to complete than in the past. There was simply more major work to be accomplished, thanks to the reduction in summer maintenance activity. While this approach did work for a brief period, as the overall economic situation of the parent companies was improved as the national economy recovered, a return to the more traditional semi-annual major maintenance approach was necessary.

In 2009, the U.S. Industrial Manufacturing Industry only saw 167 maintenance projects worth an estimated $272 million. In 2009, the number of shutdowns was even lower, with 120 shutdowns worth an estimated $258 million. However, looking at the maintenance activity scheduled for 2011, we see a return to more traditional maintenance routines, as currently 159 maintenance shutdowns worth an estimated $260 million already are scheduled to begin work during the year. Due to the way Industrial Info tracks maintenance, which involves only releasing winter shutdowns to our clients when the summer shutdowns are completed, we can expect the numbers in 2011 to be close to double what they are now by the time 2011 is over.

While the total number of projects and their associated total investment value may not be high when compared to capital work proposed for 2011, it is a significant sign that companies are feeling more comfortable about the outlook for the national economy than they have over the past two years. If the companies that make up the U.S. Industrial Manufacturing Industry were not comfortable with the overall recovery, they would be continuing the program of reduced major maintenance, something that is clearly not happening this year. Couple this increase in major maintenance activity with the significant increase in proposed capital projects, and you have an industry that is poised for a banner spending year and looking forward to a fruitful economy for quite some time.

While this increase in major maintenance activity does not bring back the closed plants or necessarily put more of the laid off workers back on the production line, it does indicate a confidence in the recovery that should lead to job additions in the near future. If companies are willing to invest more heavily in maintenance work once again it will not be too long before they are boosting employment to meet the production needs as they increase. Companies are taking a more long-term approach to how they invest in their infrastructure, and this cautious approach has led to slower spending. However, it will lead to more productive plants, which will eventually lead to a more profitable industry, which certainly is a good thing for all involved and an indication of a bright future.

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.