The construction industry in the United States is flourishing. But that doesn’t mean businesses can just sit back and watch the money roll in. Digital transformation journey has to be adopted in order to stay competitive. Here are the 3 key U.S. construction industry trends you need to know to stay ahead of your competition.
The State of the Construction Industry in North America
The future is looking bright for construction firms across the globe, with Global Industry Analysts Inc. projecting the global construction market to exceed $1 trillion by 2020. And the U.S. industry is no exception, although last year’s optimism has had to be tempered a bit.
According to EY, the biggest driver of construction industry growth in North America are the positive trends in housing. This is reflected in the current trajectory in spend and employment within the U.S. construction industry.
(Slowly) Growing Construction Spending and Employment
Construction Dive’s construction industry data and statistics, updated monthly, show that 2017’s spending levels are still above those of 2016 and before. However, after a strong start, these levels have seen a steady decline over the course of 2017 — with a small uptick in the past few months. While the levels still exceed those of 2016, there is a clear downward trend.
Construction employment rates are rising, but at a slower rate than spending. According to Construction Dive, the labor shortage has proven a major challenge for construction firms; the industry’s struggle to recruit qualified workers is a growing cause for concern. Employment levels are still below levels from 10 years ago.
So it’s not good news across the board.
No Building Boom in 2017
Another setback for the building materials and construction industry: the new administration’s ambitious infrastructure plans have yet to materialize.
As the Financial Times reports, the Trump administration has so far not delivered the president’s promised $1 trillion building boom. While this was originally pledged to be delivered during the first 100 days of the new administration, it has yet to materialize, and an infrastructure package isn’t expected until 2018.
Moreover, the recently launched tax plan could make it even more of a challenge to finance construction projects because it removes the tax-privileged status of private activity bonds, which are used for construction and building projects. This adds to the list of obstacles the industry faces.
But there is still reason for the U.S. building and construction sector to remain optimistic. In the same report, the Financial Times quotes Daniel Davies, co-head of research at Inframation on the ongoing optimism of the industry about the campaign pledge. “The general feeling is that this is something at the tip of Donald Trump’s tongue and something he’s likely to achieve given his career within construction and in building private sector relationships.”
3 Key U.S. Construction Industry Trends
With increased spending on the horizon but limited resources, these are interesting times for the U.S. construction industry. There’s a lot to be won, but the way forward isn’t always clear.
However, the need for efficiency is obvious. And, luckily, technological advancements provide the answer. Here are key digital transformation trends that can help your company thrive.
1. Building Information Modeling (BIM)
If you’ve worked on public projects before, you’re already familiar with Building Information Management or BIM software, which is mandatory for those jobs.
But BIM platforms can add value on all kinds of projects.
BIM software helps improve communications with clients, but also with other parties involved in projects. Increased transparency and a single source of truth: what better foundation for improved collaboration?
It doesn’t just sound good in the abstract, either. According to Boston Consultancy Group analysts, BIM should be advanced enough to deliver productivity gains between 15% and 25% as early as 2025.
And did you know: if you’re interested in expanding beyond the United States, BIM should definitely be on your radar. Use of Building Information Modeling platforms is used extensively in China, is recommended in the EU, and even mandatory for (some) public sector projects in the UK, Norway and South Korea, with Germany to follow in 2020.\
2. Internet of Things (IoT)
The launch announcement of the Google Home Mini (via pop-up donut shops) only underlines what we already knew: the Internet of Things isn’t an ephemeral trend. This technology is here to stay, and it’s already changing the way we live and work.
One way that the construction and building industry can benefit from IoT technology is advanced tracking.
For example: wearable smart devices make it easier to track employees. This offers opportunities to improve safety, but also minimize labor waste and even fraud. Another way construction companies can benefit from IoT is equipment and machinery with online capabilities that can monitor and communicate about its own status, streamlining your maintenance and repair processes.
3. E-Commerce for Building and Construction Materials
BIM software helps you streamline collaboration and communication. You can optimize operations using IoT technology. And with e-commerce for building and construction materials, you can bring your commercial processes up to speed too.
Both DIY enthusiasts and construction professionals already have plenty of options when it comes to ordering building materials online. The Home Depot’s web store offers over 700,000 items online (as opposed to 35,000 products in a typical brick-and-mortar location), while W.W. Grainger Inc.’s e-commerce sales now account for 47% of total sales.
And if you needed any more proof: Amazon’s tools and home improvement sales are outpacing the rest of the market’s.
One Click Retail reports that from 2015 to 2016, Amazon’s U.S. tools and home improvement sales saw 35% year-over-year growth, resulting in a total value of $5 billion. While the total U.S. market was worth $313 billion, it saw just 6% year-over-year growth: just a fraction of what Amazon realized.
It’s clear: there’s plenty of demand for an easy way to buy tools and materials online. Is your company already capitalizing on this?
How Does Your Company’s Digital Transformation Compare?
A digital transformation project isn’t something you can complete in a matter of weeks. And with such a diverse industry, it’s impossible to make blanket statements about the average progress of digital transformation in construction.
The Boston Consultancy Group has taken a closer look at digital transformation maturity in building materials companies, and identified three stages.
- Early stage. This encompasses companies that are taking the first steps in their digital transformation journey. Typical early-stage companies include heavy-side produces of aggregates, cement, ready-mix concrete and asphalt paving.
- Middle stage. Light-side produces of wallboard, concrete products, pipes, bricks, tiles, insulation and glass are farther along the path to digital transformation, but the end often isn’t in sight for them yet.
- Advanced stage. According to BCG, distributors are the only construction companies that have mastered the digital transformation process. But even the digital vanguard of the building industry aren’t on the same level as frontrunners from other industries like retail and media.
Are you on track compared to your industry peers? Whether you need to catch up to your competitors or cement your lead, our construction industry trend report has the information you need to master your digital transformation.
Ready to learn more about BIM, the Internet of Things and e-commerce for construction?