The construction industry is changing. While forecasts suggest that it will continue to grow in the next few years (annual growth is expected to increase from its current position at 1.7% to 3.1% by 2019, which represents a real terms increase from $1 trillion to $1.1 trillion), in order to meet those targets, many circumstances have to be exactly right. One massive factor is the political influence that Donald Trump will have. As a man who became a billionaire building and developing property, he has vowed to rebuild the United States’ infrastructure and therefore bolster the industry in the process. One way in which he intends to do this is to reduce the number of regulations necessary to get a permit. He is also taking a more direct approach with his promise to build a wall on the US-Mexico border which will obviously necessitate construction (US Border Customs and Protection issued a statement last month inviting firms to bid for contracts for the wall). The future of the industry also relies upon how much it innovates and continues to improve. This is true of every sector of the economy but if other world economies are any indication, this may be more difficult than it seems.
In the UK, the construction industry has been criticized for failing to keep up with technological advances that could improve their profit margins. Dennis Lenard, the chief executive of Constructing Excellence, said that the construction industry is still stuck in the 1980s and that it has become complacent because of the work on which it believes it can rely. This is in part because the industry has not taken advantage of things like robotics and that it is difficult to engage the industry with the latest academic findings.
This failure to innovate is leading some to suggest that contrary to the projected figures, construction will suffer a decline. One potentially profitable facet of the construction industry is building homes with the purpose of renting them out. In the current market, with Millennials less able to buy their own homes (the number of 18 to 34 year olds who own a home has fallen to a thirty year low), the rental market will increase in size and building homes to accommodate this trend is, therefore, an obviously good idea. However, it is not as easy as it may sound. With more construction companies intending to build houses, the costs of both labor and materials will continue to rise.
The question then becomes how these construction firms will navigate what could be a tumultuous few years or decades. In order to survive, they will, like any business, need to find a way to maximize profits while decreasing costs. This can be achieved in a variety of ways such as relying to a greater degree on things like Concrete Pump Hire; it may be that construction firms will become more of a service and less of an all inclusive enterprise where they own their own equipment. Whether this is enough to ensure their continued trading is something that we will learn over time.