U.S. Industrial Manufacturing Sees $6.5 Billion in Projects Begin Construction in Third-Quarter 2010

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Researched by Industrial Info Resources (Sugar Land, Texas)--Recovery has been slow for the Industrial Manufacturing Industry in the United States. Given that the industry has seen the largest number of plant closures, company consolidations and job losses since the beginning of the recession, it is not surprising that it is taking a significant amount of time for the same companies to recover. Companies, thanks to the downturn, have taken a very cautious approach to how and where they are investing in capital and maintenance, which has resulted in lower spending across the board. However, spending during this past summer remained solid and ended with $6.5 billion in capital and maintenance projects beginning construction in the third quarter of 2010.

The Great Lakes region of the country, thanks to a recovering automotive sector, saw the largest number of projects begin construction during the quarter, with 62 capital or maintenance projects beginning construction during July, August or September. Traditionally, automakers and their suppliers perform summer maintenance during July, which significantly contributed to the project totals, especially after many of these same plants canceled the same shutdown that was activated a year ago due to economic concerns. With spending ramping back up within the automotive sector, the Great Lakes region should see a significant increase in capital and maintenance spending over the next year.

The Midwest region saw the highest spending on projects during the quarter, with 21 capital or maintenance projects beginning construction that are worth an estimated $1.7 billion. This was a significant improvement for a region that has suffered almost as much as the Great Lakes region during the recession. The Midwest is the home of many of the key heavy manufacturing plants that supply farm equipment, construction equipment and heavy machinery to plants and others across the country. Many of these manufacturing companies took advantage of the recession to close older plants and either relocate manufacturing to other states, preferably in right-to-work states, or flat out built new plants in right-to-work states so they could escape the hold unions have on many segments of the manufacturing sectors.

The Southeast and Mid-Atlantic regions also saw a significant number of projects begin construction during the quarter. The Northeast had fewer projects, but the total investment there topped $1 billion. With companies taking a much more cautious approach to how they spend their dollars and with the economy showing signs of a continued slow recovery, almost any spending is good news for these regions. Companies have the luxury of picking and choosing from a wider variety of locations for new facilities thanks to the recession, as communities are more willing than ever before to offer major concessions to attract manufacturers.

More than $12 billion worth of industrial manufacturing projects began construction during the summer in the U.S., a good sign of at least a partial recovery. While spending totals are likely to drop somewhat in the over the next two quarters, more due to weather concerns than anything else, next summer should improve on this year's spending totals, provided the economy continues to recover, even at its current slow pace. Currently, just more than $8.4 billion in industrial manufacturing capital and maintenance projects are scheduled to begin construction between April and September of 2011 in the U.S. This amount should almost double as we get closer to the new year, especially as companies complete their scheduled winter maintenance programs and begin to plan for next summer's. With companies taking a much slower, more careful approach to expansion, $8 billion worth of project activity planned this early is a good sign that next summer should exceed this summer when it comes to total spending, something both the industry and the country need desperately.

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.