Process Industry Capex Project Procurement Analysis – 2016

In this post, Protel MD Tony Hough takes at look at some project procurement statistics from our MyProtel project database as we move toward 2016. Read the chart and analysis below to get our take on potential capex project procurement levels in the processing industries for the next year.

Pharma

Pharma/Biotech manufacturers are constantly investing in capital equipment – they have to in order to maintain product integrity and to meet regulatory compliance. Additionally, in the altered economic climate since 2008 we’re seeing a greater number of relatively small-scale projects focusing on production and energy efficiency improvements – getting more out of the existing plants and doing it cheaper. This is particularly noticeable in France, Belgium and The Netherlands where 81% of the projects scheduled to enter procurement in 2016 are valued at between €1m-€5m, compared with 30% in the UK and 0% in Ireland.

Total project values for each of the regions are skewed by individual big budget schemes such as Public Health England’s £350m site revamp at Harlow, Pfizer’s €300m bulk biopharmaceutical facility at Grange Castle, LFB Group’s €300m ‘Factory 2020’ at Arras, GSK’s €300m site redevelopment at Rixensart, and Nutricia’s new €250m production facility at Cuijk.

Food & Drink

In general, project values within the Food & Drink sectors have a narrower spectrum than Pharma/Biotech. The highest value projects scheduled to enter procurement in 2016 are Albert Bartlett & Sons’ £50m investment in a new potato processing facility at their Airdrie site, Mondelez International’s £80m packaging expansion for its Tassimo brand at Banbury and Kerry Ingredients’ €60m production expansion at Listowel.
The table below shows the distribution of project values across the two sectors within the UK and Ireland:

Chemical, Energy & Gas

To a great extent these three sectors are linked: 71% of reported energy projects involve some form of chemical and/or gas related process, such as anaerobic digestion or pyrolysis, producing biogas or syngas. Although the scale can vary dramatically, virtually all reported Energy projects are new builds with a value in excess of £10m; the largest to hit procurement in 2016 being Orthios Eco Parks’ £600m scheme at the former Anglesey Aluminium site at Holyhead.

There are a good number of mid-scale chemical plant expansions entering procurement in 2016 such as Firmenich’s £10m project at Thirsk, and Valspar’s £6m project at Deeside. Again, total project values within the sectors are skewed by a small number of big budget schemes such as Essar’s £250m project ‘Tiger Cub’ at the Stanlow Manufacturing Complex, and Five-Quarter Energy’s proposed £500m syngas processing plant in north-east England.

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