Machinery, Chemical Sectors Claim Most Facilities in ’97

If new plant announcements are any indication, 1997 was a banner year indeed. More than 7,100 new or expanding plant projects were reported to Site Selection’s New Plant database in 1997, a 22 percent increase over the 5,576 reported in 1996. Just five industries accounted for 50 percent of the new plant submissions in 1997: industrial and commercial machinery and computer equipment, with 862 projects; chemicals, with 731 projects; transportation equipment, with 726 projects; electrical and electronic equipment/SIC 36, reporting 674 deals; and fabricated metal products, with 609.

The U.S. saw a particularly busy year, which stands to reason given the favorable economic climate the country enjoyed during 1997. Even sharp volatility in the global and domestic U.S. capital markets in the second half of 1997 appeared not to dissuade organizations large and small from proceeding with expansion and relocation plans.

But the majority of mega-projects, defined here as the 10 largest in investment in their respective categories, tended to go to non-U.S. markets. Industrial machinery and equipment, the most active industry category in 1997, saw just two mega-projects awarded to U.S. sites. Top projects in the category include a new Caterpillar power generation equipment plant in Northern Ireland ($175 million) and a new tractor plant from Fiat in India ($333 million).

The second most active industry category, chemicals, saw all top 10 projects awarded to non-U.S. markets, with every continent except North America represented in the group. China claimed the largest deal, a $3.4 billion petrochemical plant in Nanjing. Average investment in the category during 1997 was about $90 million.

Were it not for Toledo, Ohio, which won two top 10 projects from Chrysler Corp., all 10 mega-projects in the transportation equipment (SIC 37) category would have gone to non-U.S. markets. Internationally, the winner in this industry sector in 1997 was Brazil, which claimed six of the top 15 projects.

The electrical and electronic equipment category (SIC 36) saw significant new activity in 1997, with 674 projects reported to Site Selection’s New Plant database, a 20 percent increase in new projects over 1996. Markets in Asia and the Pacific Rim remain key centers of new growth and expansion, particularly Japan, South Korea and China. Taiwan claimed the largest deal in the New Plant database in 1997 for the electrical and electronic equipment sector, with a $1.45 billion semiconductor plant announced by Taiwan Semiconductor Manufacturing Co.

Fabricated metal products (SIC 34) was the fifth busiest industry sector in 1997, with 609 new projects announced, the majority of which are slated for U.S. sites.

SS