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April 12th, 2018
In considering construction industry trends, many managers and business owners wonder whether growth will remain steady enough for them to justify purchasing new equipment.
During a two-day conference held on November, 1 and 2 of 2017, economists, contractors, engineers, manufacturers and architects met in Chicago at the 79th Dodge Construction Outlook Executive Conference. One of the premier events in the construction industry, the gathering highlighted the forecast for the construction industry, presented by chief economist Robert Murray.
Drawing from a range of data and analysis, Murray’s overall assessment was that, “The U.S. construction industry has made the transition to a more mature stage of expansion.” He went on to say that from 2012 to 2015, each year saw the industry expand from 11 to 13 percent. This expansion decelerated in 2016 and 2017 to about 5 percent, where it currently stands.
He noted that, as is often the case, priorities in the industry are shifting. While sectors like multifamily housing are losing steam, the number of construction projects for office buildings, education facilities and transportation terminals is likely to rise, creating steady conditions for growth.
Even though the industry will not be expanding at the rates we’ve seen in previous years, the industry is still growing and is in overall good health.
Another forecast, done by ConstructionConnect, estimated a growth of 4.8 percent in 2018. Granted, 4 or 5 percent might seem like a small number, but if we take an alternative perspective, that’s an increase from $737.8 billion to an estimated $773.1 billion for the industry.
The bottom line: There are a lot of dollars to be had.
This, along with other factors we will discuss in this blog, indicate that it is a good time to invest in new equipment and take advantage of current economic conditions.
In addition to growth, there are other reasons to be optimistic:
In an earlier blog, we discussed how tax reform, which passed at the end of 2017, will be a boon to those in a number of industries. The cuts to the corporate tax rate, increase in Section 179 deductions and more will benefit those in the construction business as well.
Ultimately, these tax benefits will free up more capital and help increase cash flow, allowing many to reinvest in the technology and equipment they need to stay competitive and drive further profits.
That’s the big picture.
But where are some of the more specific areas you might want to invest in?
Construction industry trends to keep on the radar:
Needless to say, there will be some sectors of the construction industry that will fare better than others. But whether you need to reinvest in land-surveying equipment, shipping and transportation services, fleet management or elsewhere, there is one trend you should be paying attention to.
The theme of the 2018 Dodge Outlook conference was connectivity, collaboration and integration in the industry. At the backbone of these issues is the technology that allows teams and professionals to chisel away at costs, increase efficiencies and transform relationships.
While there will always be a need for power equipment in the construction industry, now more than ever there is a shift in emphasis to what software can do for construction businesses.
Implementing the right project management software can allow managers to track progress and collect data in real time, allowing them to adjust schedules where needed. It also allows for better communication between the many moving parts of a project, including vendors and contractors.
Of course, this is just one area where technology is changing the construction world.
Automation, AI, the use of drones and more will contribute to a rapidly transforming industry. And with steady growth forecast, you’ll want to be sure you have the equipment and software that keeps you competitive and at the front of the pack.