Plant spending higher than expected in 2006
Plant capital spending was higher than expected in 2006, and both plant and equipment spending are expected to increase in 2007, according to a recent survey of FDM 300 companies.


We asked FDM 300 companies to tell us about their capital spending plans for the current year, and to predict next year's spending on plant and equipment. This is the fifth year that we have done this survey.


Overall projected spending for 2007 is greater than actual capital spending for 2006.


Actual equipment spending for the companies that responded amounted to $67 million for equipment and $56.5 million for plants in 2006.


For 2007, companies responding this year expect to spend $81.8 million on equipment and $61.4 million on plant upgrades.


We received one response from a very large company that we will not include in the comparison because it did not report a year ago. This large cabinet manufacturer states that it spent $35 million on equipment in 2006 and plans to spend $40 million in 2007! Comparing that number with zero for the year earlier would tend to skew the numbers a bit.


Apples to apples

It was possible to compare projected spending and actual spending for companies that responded to the survey in both 2005 and 2006. A total of 28 companies reported expected spending totals for 2006 a year ago. Then these companies reported their actual spending for 2006 this year. Among this group, planned equipment spending was $34.8 million for 2006. Actual spending on equipment in 2006 was higher, at $37.6 million.


For plant spending, this group of 28 companies planned to spend $32.7 million in 2006. When actual plant spending for 2006 was carried out, that number was quite a bit higher, reaching $44.7 million.


Overall, there were 59 companies that responded to a mail survey sent to the companies that comprise the FDM 300, which is our annual listing of the 300 largest companies in the secondary wood products industry in North America. A complete list of these 300 market leaders appeared in the February issue of FDM.


In the survey, we asked these companies about their capital expenditures for 2006 and their proposed spending budget for 2007. Estimates for equipment and plant spending were requested. The number of respondents has remained fairly consistent. There were 60 companies that provided information last year and 62 the year before.


It's worth noting that this isn't a scientific survey or random sample. It is a quick summary of spending plans for 59 of the largest companies in our industry.


We received responses from a wide range of companies within the FDM 300, including manufacturers of cabinets, millwork, upholstery and office furniture.


Expansion included new finishing capabilities and rough mill equipment, along with saws, edgebanders and routers.


More than a few companies acknowledged completing large expansions and upgrades, and indicated that spending will slow in the near term.


"We just spent our wad for a while," one company responded.


Looking ahead to 2007

Equipment spending planned in 2007 ($81.8 million) is quite a bit higher than that planned in 2006 ($66.8 million).


Planned plant spending also increased, from $49.7 million planned for 2006 to $61.3 million for 2007. Even though some large projects and new plants have been completed, companies in the secondary woodworking industry are planning further upgrades in the coming year.

Have something to say? Share your thoughts with us in the comments below.

Profile picture for user karlforth
About the author
Karl Forth

Karl D. Forth is online editor for CCI Media. He also writes news and feature stories in FDMC Magazine, in addition to newsletters and custom publishing projects. He is also involved in event organization, and compiles the annual FDM 300 list of industry leaders. He can be reached at [email protected].