SOURCE: Industrial Info Resources

October 15, 2008 07:30 ET

Automotive, Plastics and Printing -- What Level of Investment to Expect in These Sectors Next Year, a Feature of "Navigating the Currents of Change" on Industrialinfo.com

SUGAR LAND, TX--(Marketwire - October 15, 2008) - Researched by Industrial Info Resources (Sugar Land, Texas) -- For the last few years, investments in the Industrial Manufacturing Industry have been expansive in North America. However, the last two years have seen a dramatic shift in spending habits for the continent's largest industry. The combination of higher oil and gas prices, the housing market crash, the credit crisis and the recent debilitating events on Wall Street have had severe effects on the industry and its spending habits.

Traditionally, more than $50 billion in capital and maintenance spending is identified by Industrial Info Resources in the Industrial Manufacturing Industry on an annual basis. However, the aforementioned combination of events has caused companies to rethink their spending strategies. In 2008, this has meant that overall spending has been reduced to a mere $30 billion. While $30 billion is still a very healthy spending allocation for a year, in any industry, it is a dramatic reduction over spending of just a year ago.

The coming year has given every indication that spending could conceivably drop even more as the economic situation in the United States continues to worsen. Essentially, every sector that makes up the industry has been suffering. The woes of the automotive sector have been well publicized with the major problems facing the Detroit Three. Other sectors, such as plastics and rubber, fabricated metal products, heavy manufacturing and housing, building products and furniture, have also suffered a great deal.

With the current situation in the automotive sector combined with high gas prices, it was expected that the transportation systems sector, which includes commuter, light and freight rail as well as ports, would flourish. This has not been the case, primarily because of a lack of governmental funding and a general lack of available financing with the credit markets in severe trouble themselves. Although commuters are seeking alternative methods of transportation -- something the commuter and light rail sectors are designed for -- and businesses should be able to rely on freight rail as an alternative shipping method to trucks, none of this has appeared because of the lack of funding, as well as the existence of an antiquated rail system that cannot support additional workloads.

Other sectors, such as the semiconductors and computers, printing and publishing, and textiles sectors, have been suffering for several years, although for different reasons. In the semiconductors and computers sector, spending tends to be cyclical, and we are currently on the downward side of that cycle. In addition, the consumer is less likely to spend hard-earned and much-needed cash on a luxury item such as a computer in these tough economic times. The textiles sector has been trending downward for several years as overseas development has been achieved at a cheaper cost, and the printing and publishing sector has continued to suffer as the Internet becomes the primary resource for most of that which used to be printed.

Overall, the industry is going through very tough times, and there is no real end in sight. The coming year is not expected to show any light at the end of the tunnel unless there are dramatic changes in the economic outlook in the U.S. in the near future. The bailouts, buyouts and consolidations that are occurring now on Wall Street will really not trickle down to affect the Industrial Manufacturing Industry for some months. We can expect an easing of spending around midyear in 2009 if things continue to improve, but it will probably be 2010 before we see dramatic increases in overall spending within the industry, possibly longer for several of the harder hit sectors.

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Industrial Info Resources (IIR) is a marketing information service specializing in industrial process, energy and financial related markets with products and services ranging from industry news, analytics, forecasting, plant and project databases, as well as multimedia services. For more information send inquiries to industrialmanufacturing@industrialinfo.com or visit us online at www.industrialinfo.com.

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