U.S. manufacturing construction, slow in 1996, to rise in 1997

Washington-After a slow 1996 for manufacturing construction, total U.S. building activity and manufacturing construction are both projected to rise a moderate 4% in 1997, the sixth consecutive increase since the 1991 recession.

According to the McGrawHill Construction Information Group, the increase in construction activity, to a total of $333.6 billion, is expected to occur in spite of an anticipated mild slowdown of the economy through the next several quarters, resulting from an expected rise in long-term interest rates. Overall, economic growth is expected to fall back closer to the 2% mark. Although the economy will be slowing, the conservative growth will be enough to grant the construction industry the necessary staying power to avoid recession.

"As the gradual recovery for the construction industry has progressed through the 1990s, it has successfully made the transition to a more mature stage of expansion," said Robert A. Murray, vice president/economic affairs for the McGraw-Hill group. "While the 1992-1994 period showed growing participation across a range of construction sectors, by 1995 the recovery had adopted more of a 'balancing act' character."

"This balancing act behavior, whereby one industry sector picks up the slack from another, has also provided the current cycle with greater staying power," Murray added. "The well-paced and sequential recovery across the various structure types has meant that the `boom-and-bust' pattern of earlier construction cycles has been avoided, and it is not likely to emerge again for the foreseeable future."

The analyst predicted public works construction will continue its growth trend with a 2% increase, displaying resistance to deficit reduction pressures. The steady health of the sector is due in part to enhanced funding by state and local governments, as well as positive funding levels approved by Congress for fiscal 1997, he said.

Following a weak 1996, manufacturing construction is anticipated to bounce back 4% to 144 million square feet, Murray said. It is unlikely, however, due to slightly slower economic growth and mildly reduced corporate profits, that the sector will increase dramatically, he noted.

Still, sectors such as aircraft and semiconductors should advance and contribute to manufacturing construction's modest growth, Murray said. As the economy continues to avoid recession, manufacturers will consider plant expansion plans, but this is unlikely to take effect substantially in 1997, he observed.

Microprocessors forecast to surge 18% annually

San Jose, Calif.-The worldwide microprocessor market will grow 18% a year through 2000, reports a Dataquest study.

The research firm predicts the market will grow from $14.2 billion in 1995 to $33.6 billion in 2000. In 1996, the market reached approximately $17 billion. Dataquest analysts expect the computational complex instruction set computing (CISC) segment, which includes the x86 microprocessors used in personal computers, to be the most profitable area in the entire semiconductor market.

"The good news is that a pot of gold awaits any vendor able to achieve success in this market," said Nathan Brookwood, principal analyst in Dataquest's Semiconductor Applications program. "The bad news is that Intel stands watch over this pot of gold, and any contender must first defeat, or at least distract, Intel before reaping any benefits in this market. This has proven to be a formidable task."

Computer microprocessors will garner more than 90% of the microprocessor revenue, but they will account for less than half of the unit shipments, he believes. "This market will continue to succeed because new applications will continue to drive demand for higher-performance systems, with most users upgrading their systems every two to three years," said Brookwood.

The embedded microprocessor market will grow at a compound growth rate of 12% through the year 2000, or $1.8 billion in 1995 to $3.1 billion at the start of the 21st century.

Balkan oil/gas maneuvers benefiting Bulgaria

Chiren, Bulgaria-In the late 19th and early 20th centuries, the Balkans were a byword for complex political maneuverings and throne-room diplomacy. Today, that spirit lives on in the emerging oil and gas industries.

In a report to the European Union's (EU) Energy Centre, Galina Pavlova, spokeswoman for the Bulgarian-Russian gas company Topenergy, predicted that its natural gas supply to the Balkans will increase to over 36 billion cubic meters (bcm) per year by 2010 but gave no figures for current demand.

Topenergy, which is 50% owned by Russia's gas giant Gazprom, plans to sell and deliver Russian gas to the Balkans through Romania to Bulgaria. From there, it will be distributed to Turkey, Greece, Macedonia, and Serbia. According to Pavlova, annual supplies of Russian gas in 2010 will be 20 bcm for Turkey, 4 bcm for Greece, 2 bcm for Serbia, and 1 bcm each for Albania and Macedonia.

Overall, Bulgaria seems likely to benefit most from the project, and the Bulgarian government is expected to finalize negotiations with Topenergy in mid-October. Bulgaria has ambitions to become the transit corridor and distribution center for gas from Russia to the Balkans, Italy, and other parts of the Eastern Mediterranean. However, Algeria, which recently completed the Maghreb pipeline to Spain, is planning a similar trans-Mediterranean line to Italy-a project that could take some of the shine off Russia's and Bulgaria's plans.

Bulgaria already has a 1,370mile pipeline network, induding 390 miles of transit pipelines. Topenergy needs to increase the amount of transit pipeline to 800 miles by 2010 and to build 240 megawatts of compressor stations if it is to meet the projected Balkan demand. Furthermore, Bulgaria expects its 1996 demand to be more than 6 bcm, rising by up to 8% by the year 2000, when Topenergy plans to increase the capacity of the Bulgarian distribution system from 17 bcm to some 30 bcm.

Copyright Instrument Society of America Jan 1997
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