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Building Contractors Benefiting from Business Increases

Discover how building contractors are benefiting from the increases in construction business and overcoming challenges in the industry. Explore the latest trends, forecasts, and technologies shaping the future of construction.

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Building Contractors Benefiting from Business Increases

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  1. Building Contractors Benefiting from Business Increases • During the first 11 months of 2017, construction spending totaled $1.1383 trillion, a 4.2% increase from the $1.0919 trillion spent during the same 2016 period. • Private-sector construction for November 2017 was $964.3 billion, an 8.0% increase YOY. In public construction, November 2017 spending increased 1.2% YOY. • Residential construction increased 14.7% during November 2017, compared to November 2016, while non-residential construction only increased 0.8% YOY.

  2. Reaching New Heights During 2018 • According to Associated General Contractors of America (AGC), construction spending will increase from 2% to 7% during 2018, compared to 2017 levels. • AGC forecasts that private, non-residential construction will increase 1% to 5% during 2018, including projects related to natural gas, warehouses and data centers and specialized healthcare facilities, such as outpatient urgent care centers. • The strongest area for residential construction is in additions and renovations to existing single- and multi-family residences. New single-family construction is likely to maintain approximately an 9% growth rate, but multi-family new construction will be flat.

  3. Builders Say the Future Is Bright • According to the latest Associated Builders and Contractors’ (ABC) Construction Confidence Index, sales expectations, profit margin expectations and staffing level intentions all declined from the second half of 2016 to the first half of 2017. • The indices, nonetheless, were still in optimistic range, with 55% of contractors expecting their profit margins to increase during the first half of 2018, despite increasing labor and material costs. • Florida construction firms are experiencing the same challenge that firms across the country are facing: finding enough skilled laborers. Although the Q3 2017 survey found the sales expectation index greater than 70, worker availability was 30 or less.

  4. Improvements in Home Building • The National Association of Home Builders’ Housing Market Index (HMI) shows a strong market for single-family homes at 72 for January 2018 on a 100-point scale, compared to 67 for January 2017. • The forecast for the first six months of 2018 is a continuation of strong sales with an HMI of 78. The housing index is highest in the West (83), followed by the South (72), Midwest (69) and Northeast (62). • Older Millennials are driving demand for single-family homes as their careers progress and they start families. Rebuilding from Hurricanes Irma and Harvey also boosted the industry. Prices are forecast to increase 9%, pricing some from the market.

  5. Contractors’ Challenges • The construction industry is finding it difficult to attract qualified young workers. Some contractors are partnering with school districts to interest children in construction careers and give them the skills to qualify and obtain construction jobs. • The construction industry has historically been slow to adopt new technologies, but it will need to incorporate technological advancements, including robotics, lean work processes, SMART buildings and technology-enabled productivity tools. • The tax reform bill that Congress passed at the end of 2017 will benefit non-residential construction by lowering business taxes, but it may depress residential housing construction by reducing the consumers’ financial incentive to own a home.

  6. Construction Tech • Almost one in five (18%) small and medium business professionals in the construction industry are currently using drones for photogrammetry and mapping; another 9% say they will use drones during the next three years. • Almost a quarter (24%) of construction professionals surveyed said they plan to use robots and autonomous equipment by 2020. Augmented reality is still expensive; 6% said they are using it now and 10% plan to use it during the next three years. • Despite the hype about 3D-printed construction components, only 4% use it now and 7% said they plan to use it by 2020.

  7. Advertising Strategies • Advertise smaller, starter homes for Millennials and highlight space that can be used as an office for work-from-home and gig economy workers. • If you do commercial construction, exhibit at manufacturing association trade shows. • Partner with real estate companies to reach new homeowners who want to renovate or expand their new homes.

  8. New Media Strategies • Offer customers a peek into the progress you are making on their home or non-residential construction project by promoting access to a special Web page with photos, updates and chat for questions. Post links on social media. • If you use high-tech tools, such as drones, include photos from the drones on your Website and highlight the improved efficiency they give your company. • Promote a construction career with a dedicated page on your Website with videos from apprentices explaining the benefits of their career. Ask one or more apprentice to use social media to post an occasional video of his or her progress and experiences.

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