Companies continue to show strong levels of investment in new and upgraded industrial facilities, according to the 2012 U.S. Investment Monitor (USIM) prepared by the Quantitative Economics and Statistics (QUEST) practice of Ernst & Young LLP.
This year's study shows that energy projects continue to attract significant investment, the automotive industry remains a strong source of new jobs, and the U.S. continues to be an important location for advanced manufacturing facilities.
The report analyzes major U.S. business investment projects in each state and focuses on mobile capital investments, defined as projects that are not tied to specific geographic markets, natural resources or other constraints. The 2012 USIM analyzed 5,000 business investments, which account for $135 billion of capital investment in business facilities and more than 336,000 new and retained jobs announced in the U.S. in 2011.
Capital investments were highest in states with substantial energy sectors, primarily Louisiana, Texas and Pennsylvania. The Gulf and East Coast had the highest number of announced jobs, led by Texas, Pennsylvania and Ohio.
Six of the twenty largest capital investment projects were related to oil and gas extraction, processing, and refining. Three of the top 20 largest investment announcements in 2011 were semiconductor fabrication facilities.
"Companies, particularly those in growth industries like automotive, high tech and energy face the potential for a shortage of skilled labor in the U.S. in the coming years and this poses one of the biggest critical risk factors to their continued business growth unless addressed early," said Josh Herrenkohl, a principal and the East Coast leader of Ernst & Young LLP's Construction and Real Estate Advisory Services (CREAS) practice.
Manufacturing projects accounted for 60% of announced capital investment, and 56% of jobs. The average capital investment per announced job in 2011 was $405,000 compared to $213,000 in 2010. This level of investment is similar to 2008 and 2009, which was another period of large energy projects and other capital intensive facilities.
Six of the top 20 largest job announcement projects were in the automotive industry. Overall, the semiconductor and electronic component manufacturing industry announced over 28,000 jobs in 2011, including six projects with 1,000 or more jobs each.
"As the economy continues to expand within a few key sectors, companies in those sectors need to carefully manage the risks associated with the very large capital investment / construction programs needed to support such growth. Large scale construction of advanced manufacturing facilities, power plants and utility infrastructure is an area in which companies can see huge cost overruns mount extremely quickly if they are not careful," said Mark Gibson, a partner and West Coast leader of Ernst & Young LLP's CREAS practice.
Top states for mobile capital investment:
• Louisiana: $20.9 billion
• Pennsylvania: $12.5 billion
• Texas: $10.1 billion
Top states ranked by new and retained mobile project jobs:
• Texas: 30,100
• Pennsylvania: 27,100
• Ohio: 26,200
Keep up weekly on national news, trends and property leads with the Watch List Newsletter,
a weekly pdf that includes other news and leads not found on the CoStar Group web news pages. Sign up for the Watch List E-Mail Alert
. A new issue is published late each Wednesday.