Machinery, Electronics Sizzle in ?96

Manufacturing execs looking to boost capacity were never busier than last year: The number of new and expanding plants reported in Conway Data?s New Plant database soared by 22 percent.

?Where to grow?? was the big question facing a reengineered, ?rightsized? industrial sector in 1996. For many industry chiefs planning billion-dollar investments, locations outside the United States seemed the answer.

Higher-than-ever numbers of plants in certain manufacturing categories — industrial and commercial machinery, computer equipment, electronics and other electrical equipment and components — were announced or built in 1996.

Some economists say the ongoing global recovery has kicked machinery and other industrial expansion plans into high gear; others suggest anomalies in the business cycle. Whatever the reason, the tally of sizable manufacturing projects during 1996 climbed to 5,576, considerably higher than 1995?s 4,582.

Metrics for the top five industries — machinery, electrical, rubber/plastics, transportation and chemicals — pinpoint the concentrated growth of manufacturing. Those top industrial superstars claimed half of all the new manufacturing projects for 1996; the top two alone — machinery and electronics — accounted for more than one-fifth of all the new and expanded plants.

Industrial super projects — those costing US$1 billion-plus — were overwhelmingly being located outside the United States, as technology continues to simplify international manufacturing operations. All 11 chemical and transportation superprojects, for example, are planned for Brazil, China, India, Malaysia, Russia, Singapore, Saudi Arabia or Taiwan.

A short list of U.S. states attracted substantial shares of the five industrial superstars: Michigan, New York, North Carolina, Ohio and Texas. New facilities in the top-rated industry groups are in high demand because they usually mean higher-than-average capital investments, new jobs and space added. Machinery facilities, for example, brought the most new jobs — 243 per plant — of all the standard industrial categories.

What?s more, two of the top five — electrical and transportation — rank among the heavy hitters by all three measures: electrical (SIC 36) projects average 113,000 sq. ft. (10,500 sq. m.), 220 new jobs and $110 million capital investment. While average space added and new jobs are slightly lower at transportation equipment plants, capital investments are higher, $126.8 million per plant.