Industrial Hot Spots
The following information was gleaned from recent reports by Industrial Info Resources (www.industrialinfo.com), based in Sugar Land, TX. Second-quarter industrial construction spending in the Great Lakes region more then doubled from the same period in 2005, and it appears as though the third quarter will easily do the same. There are over 320 active capital and maintenance projects that are scheduled to begin construction during the third quarter of 2006, representing over $13 billion worth of investment in the region. Kentucky seems poised to lead the pack with over $4.4 billion in project spending scheduled to begin during the third quarter. This is primarily due to the proposed $2 billion Bluegrass mustard gas demilitarization plant, the proposed $1.1 billion coal 750-megawatt (MW) Trimble County Unit #2 addition and the proposed $1 billion Worldport air hub expansion. The state of Ohio is second in third-quarter construction starts with 80 projects worth $3.4 billion set to begin work during the quarter. Next is Illinois with $1.95 billion in project work, Indiana with $1.35 billion, Michigan with $1.34 billion, and Wisconsin at $597 million in project spending for the quarter. By summer's end, the Great Lakes region will have neared $25 billion in construction starts, a very successful summer. There are no signs this kind of spending will not continue into the fourth quarter and beyond into 2007. Across the Southeast market region, which is composed of Alabama, Florida, Mississippi, Georgia, and Tennessee, companies with manufacturing plants and electrical generating stations have plans to invest over $17 billion in capital and maintenance projects that are slated to begin construction in 2006. The Southeast region, with its expansive coastline, has become a leading axis for distribution, transporting, and storage of goods being moved by water. A move to capitalize on the waterways of the region has spawned a wave of industrial manufacturing investments and expansions of container terminals at marine ports. Record crude oil and gasoline prices have fueled a record expansion of ethanol production. According to Jay Brunson, vice president of renewable fuels for Industrial Info, “The U.S. ethanol industry has more than doubled project spending activity in the last year, and has increased from $9 billion at the beginning of the year, up to $16 billion spread out over 234 projects.” The majority of the new plant construction will occur in the traditional Corn Belt states, but demand is spurring development in non-traditional ethanol producing areas, such as the West Coast. For example, Pacific Ethanol, Inc. (Fresno, CA.) plans to construct a total of five ethanol plants totaling 220 million gallons per year by the end of 2008. The company has begun construction on two of the projects, one in Madera, CA, which is nearing completion and one in Boardman, OR. The pharmaceutical-biotech industry has 78 plants carrying a total investment value of $6.3 billion, in various stages of construction across North America. These new facilities include both elaborate research facilities and state-of-the-art manufacturing plants and are scheduled for completion through 2009. California tops the nation with eight of these new plants currently under construction, representing nearly $900 million in capital investment. Traditional industry strongholds of Maryland and Massachusetts came in second with seven plants each, as did Texas. While not known as an industrial powerhouse, Arkansas sees industrial companies planning 129 projects totaling $4.4 billion scheduled to begin construction in 2006 or beyond. The power industry accounts for almost $3 billion of that total, led by the $1 billion, grassroot Plum Point coal-fired power plant, being constructed in Osceola, Ark. According to mid-year 2006 analysis of Industrial Info Resources' Industrial Project Database, there are 391 active industrial projects in the West Coast states of California, Oregon and Washington with scheduled construction kick-off dates in 2006. These projects represent over $12.3 billion in capital and maintenance expenditures. As of the mid-year 2006 analysis, 232 plant projects have been identified as having started construction, representing a whopping $6 billion in capital dollars. Approximately 58 projects have been completed so far this year representing $1.8 billion worth of spending and another 293 projects are in the pre-construction stage scheduled to kick off over the next six months. Compared to mid-year 2005 analysis, both the number of projects and total investment value have increased in 2006.
Oil & gas production, +212%
Synthetic fuels, +146%
Metals & minerals, +83%
Chemical processing, +41%
Power, +36%
Pharmaceutical & biotech, +27%
Industrial manufacturing, +18%
Food & beverage, +17%
Oil & gas transmission, +2%
Pulp, paper & wood, +.03%
Petroleum refining, -35%
Bulk storage terminals, -29%
North American Projects Up 26%
North American project spending is up 26% for 2006 compared to 2005, according to Industrial Info Resources. This represents an increase of $42.98 billion in spending.Industry winners and losers include:
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