2019 Industrial Market Outlook

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Our industry coverage encompasses energy, power industrial processing and heavy manufacturing sectors.

IIR’s Industrial Market Coverage

O & G PRODUCTION ONSHORE AND OFFSHORE OIL & GAS PROCESSING LNG EXPORT TERMINALS, GAS-TO-LIQUIDS

O &G PIPELINES ONSHORE AND OFFSHORE CRUDE OIL, CONDENSATE, GAS & REFINED PRODUCTS

O & G TERMINALS STORAGE FACILITIES, LNG RECEIVING & REGASIFICATION

PETROLEUM REFINING (HPI) REFINERIES, LUBE OIL PLANTS AND ASPHALT PLANTS

CHEMICAL PROCESSING (CPI) PETROCHEMICAL, AGRICULTURAL, INDUSTRIAL GASES, ORGANIC & INORGANIC CHEMICALS

PHARMACEUTICAL & BIOTECH MANUFACTURING FACILITIES AND RESEARCH LABORATORIES

ELECTRIC POWER GENERATION, TRANSMISSION & DISTRIBUTION

METALS & MINERALS MINES, MILLS AND PROCESSING PLANTS

INDUSTRIAL MANUFACTURING DURABLE AND NON-DURABLE GOODS MANUFACTURING

FOOD & BEVERAGE PROCESSING & DISTRIBUTION/STORAGE FACILITIES

PULP, PAPER & WOOD MILLS, FOREST PRODUCTS & CONVERTING PLANTS

ALTERNATIVE FUELS ETHANOL, BIODIESEL, COAL GASIFICATION, FUEL PELLETS

HELPING YOU MAKE SMARTER, FASTER, FACT-BASED DECISIONS IIR’s Journey

Projecting

•Data Quality

•Data Reach, Depth & Breadth

•Global Research Methodology

• Industry Knowledge

IIR’s Customer Commitment

Forecasting

• Statistical Modeling

• Spending Statistics & Indices

Predicting

•Predictive Analytics

Mar

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We continue to challenge ourselves to help our customers navigate through the complexities of today’s markets

2019 Capital & Maintenance: $329.9 Billion, revised down from $334 billion Representing a 0.7% Increase from 2018

6.7% 8.8%

-1.2%

4.2% 5.2%

0.7% -2.9%

U.S. Plant Spending Forecast Soft Landing from Mega-Projects

$ Billions

Industrial plant spending statistics are sourced from IIR’s Top Line Spending Forecast representing all forms of capital and maintenance activity within the (12) industrial markets covered by IIR. Forecasts are updated on a quarterly basis with validation at the plant level.

Tail Winds • Macro Economy Momentum • Consumer Sentiment High • FED Flexibility • NAFTA-TO-USMCA • Rising Oil & Gas Output

Head Winds • Government Shutdown • China Tariffs Hit Home • Rising Costs • 10%+ Correction in Equities • The End of the Expansion • No sign of Labor Relief Y/Y % Change

$278.0

$302.4 $298.8 $311.4

$327.7 $329.9 $320.4

$240

$260

$280

$300

$320

$340

2014 2015 2016 2017 2018 2019 2020

$97.8

$69.7

$103

New Plant Construction

U.S. Shale Revolution Industrial Market Spending Driver

Bakken, Eagle Ford, Permian, Utica

Marcellus, Niobrara

INPUT BENEFICIARIES OUTPUT BENEFICIARIES

6

Drill Pipe Fabrication

Steel Pipe/ Tube Mills

Fracturing Equipment Producers

Proppant Producers

High-Velocity Fluids

Frac Sand Mines

Midstream Processing

Ethylene Capacity

Storage Terminals

Fertilizer Plants

LNG Export Market

Gas to Liquids

Petroleum Refineries

Manufacturing

Electronics

Ceramics

Textile

Micro-LNG Domestic Market

Pipelines

Automotive

Downstream Petrochem

Methanol

Power Generation

Production Field

Still Viable with Low Crude Prices

2,558 Projects @ $182 billion 2007 - 2014

Paints Coatings Chemical Industry

Rubber & Plastic Good

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CONFIDENTIAL - No portion of this presentation may be reproduced without prior written consent. © 2018 Industrial Info Resources, Inc. 1-713-783-5147

U.S. Labor Demand Demographics 2019 & 2020 Industrial Plant CAPX and Maintenance

High Demand Areas include: San Francisco & Los Angeles, CA Metro, Charlotte & Raleigh, North Carolina Metro, Beaumont, Corpus Christi, Dallas, Houston, and Midland/Odessa TX Metro, Baton Rouge, Lake Charles, and New Orleans, LA Metro, Columbus & Toledo, OH Metro, Pittsburgh, PA Metro, Atlanta & Augusta, GA Metro, Detroit, MI Metro, Chicago, IL Metro

20 million + Hours

Top 19 Metros with 20+ million hours

123 Million Hours

121 Million Hours

326 Million Hours

2019+2020 = 1.60 Billion Hours

© 2019, Industrial Info Resources, Inc., 2277 Plaza Drive Suite 300, Sugar Land, Texas 77479

• Economic momentum continues without major disruption

• 2020 could be our downturn year after 10 years of recovery and

expansion – Moderate, Not Recession

• Oil & Gas Midstream markets remain strong – exports grow

• Natural Gas-based industries leverage cheap feedstock

• Consumer spending weakness (2020/2021) impacts specific industries

2019 Industrial Market Forecast Outlook Conclusion …

© 2019, Industrial Info Resources, Inc., 2277 Plaza Drive Suite 300, Sugar Land, Texas 77479

The Gulf Coast will continue to see a deficit in the tens of thousands of workers in any given year over the next 5 years. As craft labor demand continues to grow, so do the deficits in soft crafts (Insulators, Painters, Carpenter and Scaffold Builders)

2019 Industrial Market Forecast Labor Insights Conclusion …

© 2019, Industrial Info Resources, Inc., 2277 Plaza Drive Suite 300, Sugar Land, Texas 77479

Owners and contractors are increasing their training programs for workers and changing their crew mix to allow for more helpers or apprentices Training programs are being re-introduced into the local high schools in many areas to give student other options or opportunities for career paths. Companies are also changing up the compensation models to draw and retain the high skilled labor. Modular builds are coming into play, but not a rate that will change the labor dynamics we are currently seeing.

2019 Industrial Market Forecast Labor Insights Conclusion …

Thank You!

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