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USA Country Market
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Construction Market


Overview: The US building and construction industry is largely reliant on the vagaries of the overall US economy. As the economy retracted over the past two years the building industry resisted the slower-growth pressures, however, it has softened.

The US building and construction market can be categorized into the following areas: Heavy infrastructure construction; Single family home building; and Industrial building construction.

Heavy infrastructure construction: Typical projects constructed by contractors in this industry include: athletic fields, dams, dikes, docks, drainage projects, golf courses, harbors, parks, reservoirs, canals, sewage treatment plants, water treatment plants, hydroelectric plants, subways, and other mass transit projects.

The industry generates around 55 per cent of revenue from work on privately funded projects (communications, railroads, and non-residential buildings), and 45 per cent from public sector construction projects (water/sewerage and transport infrastructure).

The industry currently generates revenue totaling $60.50 billion, with value added of $33.25 billion, or approximately 0.25 per cent of US GDP in 2009. Industry employment totals around 260,000 persons in 17,000 establishments in 2009, representing strong employment growth of around 3.5 per cent per annum over the past five years. The industry has a fragmented structure and comprises many small scale contractors servicing narrow regional or niche construction markets. The largest firms in this industry are some of America's leading construction companies, but each account for less than 2.5 per cent of annual industry revenue.

IBIS World forecasts that industry revenue will grow at an average annualized rate of 2.5 per cent over the five years to 2014, lagging marginally behind the cyclical recovery in the US GDP of 2.8 per cent per annum, and falling well short of the industry's performance since the mid-2000s due to weaker demand in most global and local infrastructure markets.

The industry will continue to derive demand from the reconstruction activity in New Orleans and surrounding regions impacted by the hurricanes. 

Single family home building: The single family home building industry includes firms undertaking construction of new housing along with renovations and repairs to existing homes.

The industry contains several large scale players which operate in many locations across the national building market, however, the industry is characterized by its many small-scale establishments which operate in narrow regional markets. The industry currently comprises approximately 160,000 businesses. 

The single family home building industry enjoyed a period of unprecedented cyclical growth from the mid-1990s to the mid-2000s, however, following the unparalleled growth in construction activity, which culminated in record levels of housing starts and housing investment in 2005, demand conditions have crashed in the US housing market with an unprecedented decline in investment and housing starts. Consequently, industry revenue plummeted by an estimated average annual rate of 14.1 per cent, over the five years to 2009.  

Demand conditions are forecast to improve in the US housing market early in the outlook period, corresponding with improved housing affordability, and the cyclical recovery in general economic activity, however, given the depth of the current cyclical trough in housing demand, construction activity will remain well below the levels of the mid-2000s.

Any upswing in housing demand is unlikely to be evenly spread across the nation, with strongest growth evident in the southern ‘Sunbelt’ region associated with the reconstruction activity in New Orleans, and stronger trends in population and industrial growth.    

Top home improvement chains are: Home Depot; Lowe's Cos; Menard Inc.; 84 Lumber; Sears Hardware; True Value Hardware; and Ace Hardware.

Industrial building construction: The industrial building construction industry is the smallest of the general construction industries. It has displayed extremely volatile growth conditions over recent decades and the tendency for companies to invest into machinery and equipment rather than new building stock.  

Investment into the downstream industrial and commercial building markets has trended downwards during 2009 in response to recessionary conditions in the general economy, and particularly the recent meltdown in the global financial markets, which has limited access to investment funds.

The need to replace warehousing and distribution terminals in New Orleans damaged by Hurricane Katrina, may add to the flow of investment towards adjacent transport hubs in the gulf region (i.e. Houston, Tampa and Miami).

Opportunities: The main construction machinery imports to the USA include: earthmoving equipment (i.e. bulldozers, shovel loaders, and excavators);  off-highway trucks; power cranes; crawlers; draglines; trenchers; compactors; mixers; graders; pavers; scrapers; components / parts; and attachments. This equipment is used for the construction of residential and non-residential buildings, for new power and manufacturing plants, and for adding to or renovating infrastructures such as sewerage and water lines, roads and bridges.

Building materials imports include: cement; roofing shingles; lumber and millwork; fabricated structured metal; flat glass; stoneware; mobile homes; pre-fabricated metal buildings; and plumbing products.
 




  2012 3rd International Conference on Environmental Science and Development (ICESD 2012)