Industrial construction spending

HOUSTON The industrial market in the north central part of the country expects strong construction activity to start 2006 after an impressive turnaround this year, according to the market research firm Industrial Information Resources here. Industrial customers are planning 82 capital projects in the Midwest region for the first quarter of 2006, representing more than $2.3 billion in spending, reported

HOUSTON — The industrial market in the north central part of the country expects strong construction activity to start 2006 after an impressive turnaround this year, according to the market research firm Industrial Information Resources here.

Industrial customers are planning 82 capital projects in the Midwest region for the first quarter of 2006, representing more than $2.3 billion in spending, reported the firm's Website Industrial-info.com. The projects are scheduled to begin from January through March 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 representing 12 industry segments.

Minnesota is expected to lead the region in project starts during the first quarter, with more than $1 billion of investment planned. During this same time period, Missouri and Kansas anticipate more than $300 million each in capital spending to begin, while Iowa and North Dakota are expecting kick-offs on projects representing more than $100 million for each state. The remaining $45 million worth of project investment should start construction in Nebraska and South Dakota.

Planned 1Q 2006 Midwest industrial project spending
(Millions of dollars)

Industry MN MO KS IA ND NE SD Totals
Power $350M $275M $322M $6M $20M $973M
Pulp, paper & wood $500M $1M $500M
Industrial manufacturing $306M $41M $8M $49M $28M $18M $1M $424M
Food & beverage $40M $48M $2M $43M $68M $2M $163M
Metals & minerals $30M $4M $34M $1M $25M $4M $141M
Synthetic fuel $75M $100M
Chemical processing $6M $6M
Petroleum refining $5M $5M
Totals $1,226M $374M $371M $174M $122M $44M $1M $2,312M
Source: Industrial Information Resources Inc.; CONTRACTOR magazine

During the first quarter, UPM Kymmenem headquartered in Valkeakoski, Finland, will begin construction on a $500 million paper machine addition at its mill in Grand Rapids, Minn. In Missouri, construction of a $32 million soybean processing plant, planned by Mississippi Valley Processors in Shelbyville, will begin in Palmyra.

At the same time, Greenlight Energy in Charlottesville, Va., will begin construction of the Elk River II Wind Farm near Cambridge, Kan. Green Plains Renewable Energy in Council Bluffs, Iowa, plans to start construction on a $75 million fuel grade ethanol plant near Shenandoah, Iowa.

In the Great Lakes region, both capital and maintenance spending numbers are forecast to increase in 2006, and 207 new industrial plants are scheduled to come online. General Motors' new general assembly and body shop facilities in Lansing, Mich., are scheduled to begin operations toward the end of 2006.

Michigan, Illinois, Indiana, Ohio and Wisconsin comprise the Great Lakes region. When 2005 comes to an end, the region will have been host to another successful year, not only in terms of industrial capital and maintenance spending but also with the number of grassroot plants that have become operational, IIR reported.

Between 2000 and 2002, almost 400 grassroot plants began operations in the Great Lakes region. In 2003 and 2004, those grassroot plant numbers dropped to 90 and 86, respectively. Now 2005, however, appears to be the year that the region has gotten back on track. At this time, 134 grassroot plants have started operations or are scheduled to come online by the end of the year, a significant increase from the last two years.

Illinois has been the new plant leader for the Great Lakes region this year, with more than 40 plants opening their doors. Michigan was second with 25 new plants, while Indiana and Wisconsin had 20 plants begin operations. Ohio had 16 new plants coming online during the year.

In terms of new jobs, almost 13,000 jobs were created in the region by these new plants. Michigan added nearly 3,400 jobs during 2005. Illinois generated 2,500 new jobs and Wisconsin a little less than 2,400. Ohio created just more than 1,400 jobs while Indiana had 830 new jobs.

Five major market sectors are planning new plants and jobs, led by the industrial manufacturing sector with construction of more than 60 grassroot plants beginning operations during the year. This represents more than 8,400 new jobs for the industry. The food and beverage industry ran second with 20 new plants representing more than 1,000 new jobs, while the power industry, pharmaceuticals and biotech industry and the chemicals industry all had 10 new plants each. Those three industries combined to provide just more than 2,800 new jobs to the region.

IIR provides market intelligence on the industrial processing, heavy manufacturing and energy-related industries throughout the world.