The construction industry has been faring well these past few years, and that has positively changed the economy. At times, the overall picture seemed bleak. But with technology advancements and a booming economy, the industry has thrived in recent years. As the world’s largest construction industry, the U.S. boasts annual construction expenditures over $1 trillion.
The construction industry employs over 10 million workers, so it’s no surprise that even the slightest change in the industry can spell trouble for the whole economy. Fortunately, the current prospects look promising and the industry’s outlook looks positive.
In 2018, the industry expanded and it appeared the industry was again headed higher in 2019. However, industry analysts warn that growth compared to 2017/2018, won’t be as strong this year. The increase in federal and state funding in recent years is what fueled the expansion. The government provided infrastructure spending to create this growth.
It’s important to understand the growth in federal spending to realize the true transformation taking place here. The data provided by the U.S. Bureau of Economics clearly shows that the government’s impact to the industry as a whole has contributed significantly to construction over the past decade. Government spending for infrastructure has increased 21% since 2011.
The government’s contribution to the U.S. infrastructure in 2018 amounted to $650 billion. This was a significant milestone for the construction industry, because it’s the first time since 2008 that the industry has been able to achieve such growth.
Let’s look at some of the challenges that the industry has faced and might come across in the near future. It’s expected that the construction industry might experience a decrease in growth. As a consequence of the recent expenditures, there are a few hurdles that the industry has yet to face. 2019 has been a good year so far, but it hasn’t been without its drawbacks.
Technology has helped expand the industry and been a deciding factor in its development on site, but there are still a few things that are needed offsite. With the help of technology advancement, project management will see a new dawn. However, the industry still has a long way to go. The main issue that companies experience is integrating the right technology into their operations. As long as the offsite operations are not optimized, there’s a limit to the growth that onsite technological advancements can achieve.
The industry is growing rapidly, and so is the need for skilled labor. There are over 250 million construction jobs that still need to be filled. Unfortunately, the industry will face the challenge of skilled labor shortage as the number of jobs keep on increasing. There’s a serious lack of labor supply in the industry and with no clear hope in sight, the industry is set to suffer.
The increasing number of retiring baby boomers isn’t going to help the problem. The industry has to increase incentives for the jobs or take advantage of the increasing immigrant situation in the country. Legal immigration has always been a strong supply of construction laborers.
A healthy environment has suddenly become the main focus of the general public, and the shifting demographic toward a younger population has become a challenge for the industry. Some companies see this as an opportunity to adopt more sustainable practices, while some see it as a disadvantage. However, it’s true that 2019 has been all about sustainability and going green.
Many companies are focused on decreasing the carbon footprint of their operations, and they are playing a part in safeguarding the environment. Companies looking to follow in the same footsteps will need to use their resources efficiently and take up practices that will help them preserve the environment.
The overview has been helpful in determining the current state of the construction industry and its progress over the past year. While the construction industry has overcome most of the challenges that it faced, it still has to address a few of them.
If the industry has so many obstacles, it needs ways to fund an increasing number of projects that are in demand. Many construction companies have difficulty acquiring working capital to keep their businesses operating efficiently. Factoring companies can fill that need, so that funding is available when traditional sources of financing aren’t available.
Want to know more? Contact Mazon Associates!