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North American Project Spending Forecast to Rise 4% in 2010, to $303 Billion, an Industrial Info News Alert

Written by John Egan for Industrial Info Resources (Sugar Land, Texas) -- North American capital and maintenance spending is projected to increase by 4.28% this year, to $303 billion, compared to 2009, Michael Bergen, Industrial Info's senior vice president for marketing and forecast products, told about 500 attendees at Industrial Info Resources' Twenty-Ten North American Industrial Market Outlook held January 27 in Houston.

The Houston event was the first of several spending forecast events that Industrial Info will hold around North America in 2010. Future market outlook executive briefings are scheduled to take place in Denver, Colorado; Atlanta, Georgia; Baltimore, Maryland; Cleveland, Ohio; and Pittsburgh, Pennsylvania.

Attendees at the Houston executive briefing represented a broad spectrum of industry: equipment vendors, distributors, manufacturing firms, engineering and construction firms, labor unions, and financial service companies. The "Twenty-Ten Industrial Market Outlook" event coincides with Industrial Info's release of the 2010 Global Industrial Outlook, which highlights the industrial spending forecast for the coming year. Since 1993, IIR has published a forecast for capital and maintenance spending for the industrial market in North America, and the 2010 outlook marks the fifth year of projecting spending estimates around the world.

The $303 billion in North American includes outlays for capital and maintenance spending activity at more than 41,000 industrial plants. Capital budgets are forecast to reach $222 billion this year, up from $214 billion in 2009, while maintenance is predicted to total $81 billion, up from $77 billion last year, according to Industrial Info.

Not all North American industries are expected to grow this year, Bergen told the attendees. And he reminded the audience that the jury was still out as to whether the U.S. recession has ended. "In the next month, we may see revised government numbers that would suggest we are out of the recession. If in fact that is the case, there are lingering issues with unemployment and banking that could take the U.S. economy into a 'double dip' recession."

Forecast spending trends in the Canadian market for 2010 tend to mirror trends in the U.S., Bergen said. The Canadian industries with the highest projected spending increase, on a percentage basis, are:

--  Onshore oil and gas production, up 20% to $4.3 billion
--  Metals and minerals, an increase of about 17% to $16.5 billion
--  Pharmaceuticals, which will rise by 6% to $3 billion
    

Canadian industries expected to see the sharpest declines in spending, on a percentage basis, are:

--  Alternative Fuels, down about 11% to $1 billion
--  Oil, gas, and chemicals terminals, down nearly 10% to $2.4 billion
--  Industrial manufacturing, where spending will decline a little over
    5% to $12.4 billion
    

Several times during his talk, Bergen questioned whether the U.S. recession was, in fact, over. He noted that low consumer confidence is a result of, among other things, high level of government deficits, persistently high unemployment, and a sharp increase in the number of bank failures that is expected to continue in 2010.

"Consumers continue to have fears about the economy, and those fears are causing them to defer discretionary spending," Bergen told attendees at the Houston event. Consumer spending accounts for about 70% of gross domestic product (GDP), and about one quarter of that 70% is considered discretionary spending -- for dining out, travel, and entertainment. "Spending habits have changed for millions of people during this recession. An economic recovery depends in large part on lowering unemployment and getting consumers to feel more confident about the overall health of the economy."

Industrial Info Resources (IIR) is the leading provider of global market intelligence specializing in the industrial processing, 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. For more information send inquiries to industrialmanufacturing@industrialinfo.com or visit us online at www.industrialinfo.com.