Researched by Industrial Info Resources
In the first quarter of 2006, preliminary capital and maintenance spending estimates for the year indicated that the Industrial Manufacturing Industry was expected to top $47.6 billion in total expenditures by year’s end in the U.S. Now that the first quarter of the year has come and gone, a reexamination of the spending numbers for the balance of the year for the industry show a slight downturn in overall spending. Current numbers have expenditures reaching $43.8 billion by the end of December for the Industrial Manufacturing Industry, a decrease of 7.88% over initial spending estimates.Initial gap measurement projections for 2006, showed anticipated project fallout of only 3.7% for the year. However, that number has been crawling upwards with current gap measurement figures showing project fallout topping 8.8% for the year.
One major reason for this increase in project fallout has been the trials and tribulations of the automotive industry. Within the last six months, the numbers of plant closures and layoffs announced by Ford and General Motors has rocked the industry. That, coupled with the recent woes by some of the major tier suppliers such as Delphi and Collins & Aikman, has made the industry one of instability and uncertainty. Until this situation is resolved, within the automotive industry, project fallout will probably continue to rise.Barring the automotive industry, Industrial Manufacturing has shown impressive growth. Overall spending is still on course to top 2005’s year-end numbers by close to $4 billion, an indicator that the industry, as a whole, is doing quite well. Some significant spending numbers within the light and commuter rail industry, and the semiconductor industry are driving the spending for 2006.
Some examples of the projects driving spending that are currently scheduled to begin construction during 2006 are the proposed $4 billion high-speed maglev rapid transit system in Maryland, the proposed $2 billion Fab 22 semiconductor plant renovation/expansion in Arizona, the proposed $1.8 billion Dulles metrorail corridor project phase I in Virginia, and the proposed $1.5 billion grassroot semiconductor research & development facility in Texas.
In addition to specific vertical industries within the Industrial Manufacturing industry showing very positive spending trends, certain regions of the country are anticipating a very successful year, in terms of projects. In 2005, the West Coast, Southeast and Great Lakes regions of the country were the strongest in terms of spending. In 2006, that spending has shifted to the Mid-Atlantic and Southwest regions of the country, with the Southeast still showing strong in third place. Due to the decrease in automotive spending mentioned above, the Great Lakes region, the bastion of the automotive industry, has fallen to sixth place.
2006 is shaping up to be a very good year for the Industrial Manufacturing Industry. Despite troubles in some vertical industries, others are stepping up to take a lead role in annual spending. Project fallout numbers are rising, but only slightly and overall spending appears to remain on track for an increase over last year’s numbers.
All of these indicators show us an industry that is expanding despite some atypical problems, and this expansion in annual spending should only increase as the year moves forward.