Robust 2006 Seen For Industrial Construction
The previous three years had shown a downturn in grassroot plant activity with an average of only 161 new plants per year. The years 2000 and 2001 had boasted an average per year of 263 plants.
Preliminary numbers for 2006 indicate 373 industrial manufacturing plants scheduled to begin operations this year. Notable regional trends include:
The Great Lakes Region enjoyed an extremely successful 2005, with 134 grassroot plants beginning operations, a significant increase from the previous two years. Illinois was the new plant leader for the Great Lakes Region in 2005, with over 40 plants opening their doors. The coming year reveals a three-fold increase in the amount of project activity for the state. Just over $9.7 billion in construction starts are currently scheduled for Illinois in 2006. This would be a significant increase over 2005's $3.2 billion in construction starts.
The outlook for capital spending in the Midwest Region appears to be promising during the first quarter of 2006. As of this writing, Industrialinfo.com was tracking 82 capital projects representing over $2.3 billion in spending and scheduled for kick off during January through March of 2006. The Midwest region is made up of Minnesota, Iowa, Kansas, Missouri, Nebraska, North Dakota and South Dakota. This region is home to roughly 3,286 industrial plants. Minnesota is expected to lead the region in project starts during the first quarter, with over $1 billion of investment planned. During this same time period, Missouri and Kansas are expecting over $300 million each in capital spending to kick off, while Iowa and North Dakota are expecting kick offs on projects representing over $100 million for each state. The remaining $45 million worth of project investment is expected to begin construction in the states of Nebraska and South Dakota.
The state of Kentucky has over $4.5 billion worth of capital and maintenance projects in the planning stages for the coming year - although there is no guarantee all will reach the construction stage. Even if only 50% of the projects come to fruition, it would represent a marked improvement over the $1.9 billion in industrial spending realized in Kentucky during 2005 and $1.8 billion in the prior year. Of the projects planned for 2006, only nine are grassroot projects. This indicates that expansions and upgrades are the preferred investment for the state, opposed to grassroot investment by the state's industries.
Industrial project activity in the Southwest for 2006 is expected to easily increase over 2005 levels. Although spending activity in 2005 failed to reach the level most expected due in part to last summer's hurricanes, optimism springs from the surging cost of natural gas and feedstock supply issues the region now faces due to damaged infrastructure in the Gulf of Mexico and coastal areas. Capital and maintenance spending in the region is expected to sharply increase in 2006. At last report Industrialinfo.com was tracking over 600 projects planned to kick off next year with a total investment value (TIV) nearing $26 billion. Texas and Louisiana represent the bulk of the spending as they support nearly 75% of the total plant population in the region. The largest spending will take place in the power generation, chemical processing and industrial manufacturing industries, collectively representing more than $18 billion of the total spending forecast to begin during 2006.
Southeast Region first quarter 2006 capital and maintenance expenditures are expected to be around $2.89 billion. The region includes Alabama, Florida, Georgia, Mississippi, and Tennessee. Data extracted from Industrialinfo.com's North American Project Database indicates there are 190 projects slated to kick-off between January and March of 2006, of which 72 projects with a combined total investment value (TIV) of $242 million are considered maintenance, while 118 projects with a cumulative TIV of $2.608 billion are considered capital. Individual project values range from $1 million to $650 million. Mississippi leads all states in terms of combined total investment value, with $951 million. Florida ranks second with $682 million, followed by Georgia with $546 million, then Tennessee with $398 million, and lastly, Alabama with $312 million.
More than $3.7 billion in capital and maintenance spending is scheduled to get underway during the first quarter of 2006 in the West Coast states of California, Oregon, and Washington. Manufacturing leads the way in projected spending with $1.25 billion through 26 planned project kickoffs for early in the year. In the Power Industry on the West Coast, $1.6 billion worth of project work is expected to get underway once the new year begins. The Petroleum Refining Industry is planning to begin 19 new projects during the first quarter of 2006, totaling $528 million in spending. Twenty-eight projects are planned in the Metals & Minerals Industry, totaling $222 million. Four projects will kick off in the Pharma/Biotech Industry totaling $206 million in new construction spending. The largest is a new $150 million biopharmaceutical research center in Redwood City, CA. The Pulp and Paper Industry is scheduled to begin four new projects during the first quarter of 2006, totaling $124 million in capital spending.
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