FMI releases Q3-2012 construction outlook report

FMI is forecasting an 8% increase in total construction for 2013 and most of the nonresidential sectors are continuing to show general signs of growth.

11/16/2012


“Contrary to election-year rhetoric, the economy is inching its way to improvement, and the construction industry has not stopped working,” according to the third quarter 2012 Construction Outlook report by FMI. The industry forecast is calling for an 8% increase in total construction put in place for 2013. Contributing to this positive forecast is more robust growth in residential construction, as well as a few strong markets in nonresidential and non-building construction.

The focus for 2013 will be on the movement of private money back into the markets. For the economy to grow at a faster rate with the fiscal cliff looming and state and municipal budgets still in repair mode, it will be the private markets that must lead the way. Total construction put in place for 2013 is forecast to be $892 billion, a solid improvement over the last few years, but still just edging out 2003 levels of construction activity. 

Nonresidential Construction Trends and Forecasts by Sector:

  • Lodging — Hotel developers will renovate before building new properties. Bank loans will be hard to justify until occupancy and room rates remain consistently high.
  • Office — Through the first two quarters of 2012, the U.S. office sector has now absorbed 10.4 million square feet, 100,000 square feet less of net absorption than was generated over the first six months of 2011. (Jones Lang LaSalle, “Office Outlook United States, Q2 2012). This is not yet enough activity to compare with prerecession highs, but we expect CPIP to improve 4% in 2013.
  • Commercial — Expect more rethinking of commercial construction space to accommodate smaller stores and combining in-store sales with online shopping. Look for increasing multiuse projects.
  • Health care  New health care construction will include a growing number of renovation projects to update current facilities for modern hospital design, using more technology in the rooms as well as for improving air quality and reducing energy usage.
  • Education — Significantly less funding from states for K-12 schools.
  • Religious — The lending environment continues to be a challenge for many congregations.
  • Public safety — Despite overcrowding in prisons, public safety construction is expected to remain slow for the next couple of years, at least with only 1% growth in 2013 to $10.2 billion.
  • Amusement and recreation — Money for sports stadiums will be hard to find from local government investment, and banks will be reluctant to lend to anyone who couldn’t already pay for the project from cash flow.
  • Transportation — This remains a strong sector for construction. CPIP is expected to grow 6% in 2013 to a total of $38.2 billion for the year. This is due in part to The FAA Modernization and Reform Act will provide $63.6 billion for the agency’s programs between 2012-2015.
  • Communications — Growth in communication construction is being powered by an insatiable need for speed and to send and store large amounts of multimedia files over the Internet. One trend that might slow the growth in construction dollars is the trend to use mini cell “towers,” which are small, easily installed boxes that help to maxi­mize spectrum.
  • Manufacturing — Manufacturing construction is starting to make a comeback with both new growth in manufacturing output and with some companies repatriating their manufacturing capacity.
  • Power-related — Power construction will continue to be one of the strongest growth sectors for construction. Worthy to note is U.S. Army Corps of Engineers has a proposal out for $7 billion in locally generated renewable energy through power purchase agreements.
  • Highway — State budgets will continue to be strained and it will be difficult to get larger projects off the ground. Therefore, funds from the MAP-21 and TIGER grants make up a large percentage of construction put in place included in FMI’s 2013 forecast of $84.7 billion for highways and streets.
  • Sewage and waste disposal — Waste-to-energy may be one of the best bets for future work in this sector if more municipalities can find ways to work with private investors.
  • Water supply — Expect this sector to struggle to find funds for necessary remediation and construction. Strength in water supply construction will be found in pockets for industrial projects like the mining sector, power and industrial plants.
  • Conservation and Development — The 2012 annual budget for the Department of Agriculture eliminates funding for the Resource Conservation and Development (RC&D) and Wa­tershed and Flood Prevention Operations programs. New projects in this sector, like water system projects, will more likely come from cleanup for the mining and energy sector to comply with regulations.


No comments
The Top Plant program honors outstanding manufacturing facilities in North America. View the 2013 Top Plant.
The Product of the Year program recognizes products newly released in the manufacturing industries.
The Engineering Leaders Under 40 program identifies and gives recognition to young engineers who...
The true cost of lubrication: Three keys to consider when evaluating oils; Plant Engineering Lubrication Guide; 11 ways to protect bearing assets; Is lubrication part of your KPIs?
Contract maintenance: 5 ways to keep things humming while keeping an eye on costs; Pneumatic systems; Energy monitoring; The sixth 'S' is safety
Transport your data: Supply chain information critical to operational excellence; High-voltage faults; Portable cooling; Safety automation isn't automatic
Case Study Database

Case Study Database

Get more exposure for your case study by uploading it to the Plant Engineering case study database, where end-users can identify relevant solutions and explore what the experts are doing to effectively implement a variety of technology and productivity related projects.

These case studies provide examples of how knowledgeable solution providers have used technology, processes and people to create effective and successful implementations in real-world situations. Case studies can be completed by filling out a simple online form where you can outline the project title, abstract, and full story in 1500 words or less; upload photos, videos and a logo.

Click here to visit the Case Study Database and upload your case study.

Maintaining low data center PUE; Using eco mode in UPS systems; Commissioning electrical and power systems; Exploring dc power distribution alternatives
Synchronizing industrial Ethernet networks; Selecting protocol conversion gateways; Integrating HMIs with PLCs and PACs
Why manufacturers need to see energy in a different light: Current approaches to energy management yield quick savings, but leave plant managers searching for ways of improving on those early gains.

Annual Salary Survey

Participate in the 2013 Salary Survey

In a year when manufacturing continued to lead the economic rebound, it makes sense that plant manager bonuses rebounded. Plant Engineering’s annual Salary Survey shows both wages and bonuses rose in 2012 after a retreat the year before.

Average salary across all job titles for plant floor management rose 3.5% to $95,446, and bonus compensation jumped to $15,162, a 4.2% increase from the 2010 level and double the 2011 total, which showed a sharp drop in bonus.

2012 Salary Survey Analysis

2012 Salary Survey Results

Maintenance and reliability tips and best practices from the maintenance and reliability coaches at Allied Reliability Group.
The One Voice for Manufacturing blog reports on federal public policy issues impacting the manufacturing sector. One Voice is a joint effort by the National Tooling and Machining...
The Society for Maintenance and Reliability Professionals an organization devoted...
Join this ongoing discussion of machine guarding topics, including solutions assessments, regulatory compliance, gap analysis...
IMS Research, recently acquired by IHS Inc., is a leading independent supplier of market research and consultancy to the global electronics industry.
Maintenance is not optional in manufacturing. It’s a profit center, driving productivity and uptime while reducing overall repair costs.
The Lachance on CMMS blog is about current maintenance topics. Blogger Paul Lachance is president and chief technology officer for Smartware Group.