U.S. Rail Sector Will See $1.2 Billion in Project Starts in 1Q10

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Researched by Industrial Info Resources (Sugar Land, Texas)--For the past decade, the rail sector of the United States has had to fight to receive government funding for projects. However, with the change in administrations earlier this year, this was expected to change. The passing of the stimulus bill shined another ray of hope on the rail sector as billions of dollars in federal money was set aside to help get these projects off the ground. Unfortunately, stimulus funding has been slow to arrive since the bill's passage, thanks to the additional levels of red tape added to the funding process. However, despite this slight setback, the rail sector is continuing to spend money into the first quarter of 2010. Currently, Industrial Info is tracking 40 capital projects worth more than $1.2 billion within the rail sector that will begin construction during the first quarter of 2010.

Click on image at right for a breakdown by region of U.S. rail projects set to kick off in the first quarter of 2010.

While this is only a fraction of the project work planned in the rail sector, it is a very good start to what promises to be a fruitful year for rail projects in the U.S. Planning agencies are banking on stimulus funding becoming more widely available in 2010 as the kinks in the new bill are worked out. While funding has been slow in coming, the planning of projects has continued at a furious pace.

Much of the project work that will start off 2010 involves typical annual projects that rail companies must perform. Each year, both passenger and freight companies spend billions of dollars for upkeep. On an annual basis, track and ties must be inspected and/or replaced, signal and communication systems must be maintained, and ancillary facilities must be maintained as well, or the entire U.S. rail system would cease to work efficiently and safely.

In addition, major capital projects will also begin construction during the first quarter of 2010. While the beginning of the year is not the preferred time to begin construction work in many parts of the country because of the weather, site work such as utilities relocation and the clearing of future track sites can begin. An increased number of major capital projects will begin in the second quarter, when the weather is more favorable.

No single region of the country stands out in the first quarter as receiving the bulk of the coming work. A trio of regions, in fact, will each begin construction on a similar amount of project work during the months of January, February or March. The Northeast, Rocky Mountains and Great Lakes regions are expected to see $282 million, $272 million and $240 million, respectively, begin construction during the first quarter. The Southeast region will see an additional $150 million in work, while the Mid-Atlantic region, at $121 million, rounds out the top-five spending regions for the quarter.

Hopefully, as we enter the second quarter of 2010, the U.S. will experience a significant spike in rail spending. By this time, the federal government will have had more than a year to work out the kinks in the stimulus bill and decide how funds will be released. This should be ample time to cut through much of the associated red tape and deliver the funds where they can do the most good: in the hands of the agencies planning the projects. If this happens, thousands of the promised new construction jobs will be created next spring and summer. If funding continues to be delayed, then we may well have to wait until 2011 for new jobs.

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial process, heavy manufacturing and energy related markets. For more than 26 years, Industrial Info has provided plant and project opportunity databases, market forecasts, high resolution maps, and daily industry news.