Any way you look at it, the 2002 totals for new and expanded corporate facilities in the U.S. are an indicator of reduced capital investment by corporate America.
        The key question is: When will it bounce back?
        While no one knows the exact answer to that question, one thing is certain in the numbers from the Conway Data New Plant Database: in 2002, capital investment into new and expanded corporate facilities suffered its steepest drop in recent history.
        Since Site Selection started reporting the annual results of the Governor's Cup in 1989, capital spending by U.S. companies had shown a consistent pattern of growth until 1999 – the year new plant investment reached its peak with 12,702 facility projects reported nationwide.
        Since that time, new plant activity has dropped each year – from 12,702 projects in 1999 to 12,529 in 2000, 10,808 in 2001 and 7,610 in 2002.
        In fact, 2002 marked the steepest one-year drop since the inception of the Governor's Cup. The annual tally represented a 29.6 percent decline in total number of projects from 2001. Moreover, 2002's tally is 39.3 percent off 2000's pace and 40.1 percent off 1999's.
        If you're looking for an explanation, look no further than the U.S. economy. Most economists peg the start of the U.S. recession as early 2000, ending some time in the third or fourth quarter of 2002, when the economy started showing real annual growth of about 4 percent.
        Over the previous three years, corporate spending on new and expanded facilities followed a similar pattern. Starting with the last year that new plants showed growth – 1999, when the U.S. tally of 12,702 projects marked a 5.8 percent increase from 1998's tally of 12,005 – the major stock indices of America became a harbinger of reduced capital spending.
        In 2000, the same year in which new plants were off by 1.4 percent, the Dow Jones Industrial Average dropped 6.2 percent in market value, the Nasdaq dropped 39.3 percent and the Standard & Poor's 500 dropped 10.1 percent. In 2001, a year which saw new plant investment decline by 13.7 percent, the major stock indices continued their descent: the Dow dropped 7.1 percent in 2001, while the Nasdaq dropped 21.1 percent and the S&P 500 dropped 13.0 percent.
        Then came 2002, when new plants declined by 29.6 percent and all three stock indices registered their biggest losses.
        The Dow lost 16.8 percent of its value in 2002, the Nasdaq lost 31.5 percent and the S&P 500 lost 23.4 percent.
        Of course, new plant numbers alone don't tell the whole story. The Conway Data New Plant Database also tracks square footage, capital investment and total jobs tied to new plants.
        Total square footage of new corporate real estate reached its peak in 2001, when 921 million sq. ft. (85,560,900 sq. m.) of new facilities were built. That figure dropped substantially in 2002, to just 538 million sq. ft. (49,980,200 sq. m.) – a 42-percent drop.
        Total capital investment into new facilities peaked in 1999, when companies spent US$171 billion on plant construction. By 2002, that figure had dropped to $89 billion, or 48 percent off its peak year.
        Total job creation at new plants has also been on the decline since 2000, when companies added 709,349 jobs at new facilities. In 2001, companies added 537,422 jobs, and in 2002 they added just 406,650.
        The losses are not confined to any one region of the country. Of the top 10 states in the 2001 Governor's Cup competition in total new and expanded corporate facilities, not one showed an increase in projects in 2002.
        So what do these numbers mean for 2003? Nothing, really. But one leading economist on Wall Street is telling corporate real estate executives to expect a better year.
        John Manley, managing director for Salomon Smith Barney in New York, told a January gathering of 500 real estate executives in Atlanta that business fundamentals in the American economy "make a good argument" for solid economic growth.
        "We don't see great growth for the next five years, but the fact is that current business trends in this country argue for a return to times of economic growth," said Manley, a 24-year Wall Street veteran.
        Despite recent poor U.S. employment reports, Manley said he's encouraged by the number of upwardly revised reports of corporate earnings. For December, Manley noted, upward revisions of company earnings were 8 percent above normal – and 60 percent above normal for technology firms – a harbinger of economic recovery.