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The North America Heavy Construction Sectors : A Company and Industry Analysis (August 2005)
Mergent, Aug 2005
Current Environment - Key Points
- The gradual recovery of the US and global economies led to a solid first six months for the US heavy construction sector in 2005
- Construction spending in the US toppled records every month since February 2004, with residential outlays hitting new monthly highs since November 2004 on consistently low mortgage lending rates
- The strong growth in the Canadian construction industry in 2004 is likely to continue for at least another two years
Investment in office construction was the strongest in the industrial sector in the first quarter of 2005
- Residential construction expenditure in Canada totaled C$15.3 billion (US$12.5 billion) in the first quarter of 2005, up 8.6% from the corresponding period in 2004, which was a record year for the segment
- Investment in non-residential construction surpassed C$6.7 billion (US$5.5 billion) in the first quarter of 2005, increasing 1.3% because of higher business investment
Industry Profile - Key Points
- In 2004, US domestic construction activity topped US$1.028 trillion, accounting for more than 8.8% of the country's gross domestic product and with employment of about seven million workers
- Construction spending climbed to US$1.028 trillion last year
US construction equipment exports continued to improve in 2004, with the industry shipping US$8.9 billion worth of machinery to global markets
- The construction sector is one of the largest and strongest industries in Canada, with output in 2004 of C$67.4 billion (US$55.2 billion), a growth of 3.5% compared with 2003, making up 12% of Canada's GDP
- Construction spending and investment rose C$13.7 billion (US$11.2 billion), from C$136.8 billion (US$111.9 billion) in 2003 to C$150.5 billion (US$123.2 billion) in 2004, with annual spending for all types other than manufacturing construction increasing significantly
Market Trends and Outlook - Key Points
- With more focus on the environmental impact of buildings, the new field of green construction is becoming more popular
- IT is destined to revolutionize the construction industry, making it more competitive and cost efficient
Despite its slow introduction, higher-level management is starting to realize the place of IT in business
- The weaker US dollar could open further opportunities for domestic exports but imports could get even more expensive
- Employment in the Canadian construction industry in June was 21,000, or 7.6%, higher than in June 2004, with employment increases spread across a number of provinces
Over the first half of 2005, employment in the industry increased by 3%
- According to Home Builder Canada, renovation spending in Canada will hit a record high of C$38 billion (US$31.1 billion) this year, surpassing spending on home construction
- Canada is keen to promote the green building concept and to educate Canadians on the importance of having sustainable buildings and the benefits to the environment
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