美国工厂建筑行业概览.pdf

First Quarter Edition2023North American Engineering and Construction Industry OverviewJanuary 2023Table of Contents2023 Executive Overview Renew Focus on Your Strengths,People and Operations to Withstand a Downturn .1 U.S.Engineering and Construction Outlook Introduction .6 Key Takeaways.6 Residential Construction Put in Place.10 Single-family.11 Multifamily.12 Improvements.12 Nonresidential Buildings Construction Put in Place.13 Nonresidential Construction Index(NRCI).15 Lodging.17Office.17 Commercial.18 Health Care.18 Education.19 Religious.19 Public Safety.20 Amusement and Recreation.20 Transportation.21 Communication.21 Manufacturing.22 Nonbuilding Structures Construction Put in Place.23 Power.24 Highway and Street.24 Sewage and Waste Disposal.25 Water Supply.25 Conservation and Development.26 Construction Put in Place Summary Tables.27 Regional Summary.29 Construction Put in Place by Census Division.31Canada Engineering and Construction Outlook Introduction.41 Construction Put in Place Summary Tables.46Appendix(U.S.).48Authors.51Renew Focus on Your Strengths,People and Operations to Withstand a Downturn 1FMI 2023 NORTH AMERICAN ENGINEERING AND CONSTRUCTION INDUSTRY OVERVIEWs we enter 2023,much has been written about the current economic climate for the built environment.The operat-ing conditions for many firms across our industry remain disrupted and uncertain nearly three years after the onset of the COVID-19 pandemic and the resulting market turmoil.We continue to see near-record inflation,with Decembers con-sumer price index reading of 6.5%down from a mid-2022 peak,but significantly higher than the prior year.Supply chains still face disrup-tions across global markets,and companies across sectors of engi-neering and construction(E&C)continue to struggle to find the tal-ent needed to execute new and exist-ing projects.Despite some of these challenges,many of our clients saw record back-logs,earnings and revenue in 2022.Total construction spending for the U.S.is expected to end 2022 up 8%,driven primarily by residential building,multifamily,commercial and manufacturing.“Obviously,theres a lot going on in the world related to record-high inflation,supply chain challenges,resource challenges,but yet,con-struction and building has trudged forward,”says Keith Douglas,chief operating officer at Rosendin,a$2 billion,employee-owned electrical contractor.“Owners are still pushing through and wanting to build their projects,but we are starting to see some cracks out there.”Some of those cracks are projected to come from the residential mar-kets,which will be the biggest cause of a 2%forecast decline in construc-tion spending for 2023.In contrast,other segments,such as nonresiden-tial building and nonbuilding struc-tures,are expected to grow in 2023,each forecast to climb 8%in 2023,meaning a large portion of the industry will continue to see growth.Given this uneven landscape,to compete in 2023,it is critical to understand your core competencies,markets and clients.Knowing your opportunities and challenges and having a plan for tackling them will help your company continue to be successful.Furthermore,firms that focus on their people and culture and execute a clear strategy will be more likely to weather the upcom-ing downturn.Message from Chris Daum,CEO of FMIA2FMI 2023 NORTH AMERICAN ENGINEERING AND CONSTRUCTION INDUSTRY OVERVIEWCOPING WITH THE CURRENT OPERATING ENVIRONMENTWhen talking with our clients,we consistently hear that their top three challenges are around finding and retaining skilled workers both in the field and office,creating a cohesive and connected culture to nurture their workers through their careers and,in the short term,combating project delays.Recent FMI research around project delays and cancellation backs up what were hearing from clients.According to a survey conducted in September,89%of respondents experienced owner-led project start delays in 2022.Another 44%saw supply chain-related project delays.Only 8%of those surveyed said they had not experienced any project start delays in 2022.Dan Johnson,chief executive officer at Mortenson Construction,a multi-billion-dollar general contractor,agrees,“We are entering 2023 with record levels of backlog,but we have also started to see the plates shift in the last month with projects being canceled and projects being put on hold for a variety of reasons.Tech industry and related projects now are starting to be put on hold.Our renewable energy business is defi-nitely something we see a lot of potential in the long term;but in the short term,our customers are strug-gling to get solar panels,so the proj-ects are waiting for the supply chain to catch up.”His point about the outlook for dif-ferent sectors varying greatly is an important one,and something youll see throughout this quarters fore-cast numbers.As Jay Bowman,head of our market research consulting practice,says,“Bull markets and bear markets coexist at all times.”The following sector-specific infor-mation considers inflationary pres-sures,incoming federal funding from a variety of sources,and the societal shifts that are impacting overall construction spending.Its not enough to look at the initial numbers;you need to delve into economic conditions that fluctuate greatly by sector and geography.REFINE BUSINESS DISCIPLINE AND OPERATIONAL EXECUTIONWhile numbers and data are import-ant,they cant replace having a com-prehensive strategy and the tools to implement those plans,from train-ing your people to implementing operational improvements.Now is the time to assess your business and plan for whats ahead.Putting in place the right teams and plans for business development and market-ing will be a critical way to make sure you are rebuilding your back-logs with work that you can success-fully execute.“To be effective in any type of a strategy,it needs to be embraced by every individual within the organization.”Dan Johnson Chief Executive Officer Mortenson Construction3FMI 2023 NORTH AMERICAN ENGINEERING AND CONSTRUCTION INDUSTRY OVERVIEWStaying focused and being selective about what projects you pursue will be imperative in the coming months and years.To be selective,no matter the market conditions,design,engineering and construc-tion firms need superior execution skills and strategic clarity around their core competencies.“As backlogs continue to be strong,the best thing we can do to prepare is to ensure the new work we pursue is the right work,”says George Pfeffer,chief executive officer and leadership team member of DPR Construction,a$6.8 billion,self-performing gen-eral contractor.“Our early sign,like most contractors,is that a slowdown of some sort is coming as,more than normal,our projects are pushing to later time frames.We need to pursue work that allows us the best opportu-nity to overcome shortages in skilled workforce as well as the volatility in commodities markets that affects procurement.The best way to do that,we think,is not to pursue new sectors,but to focus on the things we know were best at.”For many it can be difficult to know exactly what differentiates their company from others and how to position their teams to win work.Thats why its important to have a clear strategy and to communicate that strategy to everyone on a regu-lar basis to ensure all teams are working toward the same goal.“To be effective in any type of a strat-egy,it needs to be embraced by every individual within the organization,”says Johnson.“If theyre not aware of it,then theyre not going to be work-ing toward it.So the more that you can communicate the strategy,answer the why,youre going to get a lot more people behind it.Youre going to be far more successful.”FOCUS ON CULTUREFor decades weve been talking about labor shortages,and given the cur-rent trajectory,those issues arent going away anytime soon.Were los-ing experienced field leaders as well as project managers and company executives daily.With many younger workers about to face their first eco-nomic downturn in the workforce,having clear,consistent and confi-dent leadership will be important for helping shepherd those employees through a downturn.Thats where communication becomes even more important.Being honest,transparent and clear about your business,the strategy youre implementing to be success-ful,and the culture that drives your business will help every employee feel a sense of ownership and pride in his or her work.If you havent invested in clearly articulating your companys culture and what you stand for,then how can you expect your workers across various projects to embrace that and act according to your values?4FMI 2023 NORTH AMERICAN ENGINEERING AND CONSTRUCTION INDUSTRY OVERVIEW2023 M&A TRENDSGiven the overall strength of the industry,mergers and acquisitions(M&A)for middle-market companies in the built environment remain rel-atively active.This is in contrast to larger deals and capital markets activity,which are feeling the effects of uncertainties such as recession,inflation,geopolitical risks,deglobal-ization,soaring deficits and volatile financial markets.We attribute this continued strength within FMIs coverage sectors par-tially to the fact that our typical deal size($40 million to$600 million in enterprise value)can often be less sensitive to global risk factors when compared to larger deals.More importantly,we attribute this ongo-ing M&A activity to favorable mega-trends that are driving the long-term growth of many of our sectors.Emerging trends such as reshoring and government spending programs focused on infrastructure are also driving growth and M&A interest in many sectors of the built environ-ment.For sectors we cover,includ-ing construction materials and energy solutions and clean tech,we are seeing increased government funding from bills such as the Infra-structure Investment and Jobs Act(IIJA)and Inflation Reduction Act(IRA)drive substantial investment and interest from private equity,pushing companies to become acquisitive to compete.Overarching and well-established trends that are helping drive todays M&A include the energy transition;labor shortages;aging owners;private equity investment;rapid technology advancement;environmental,social and governance considerations;and deferred maintenance and underin-vestment in U.S.infrastructure.M&A trends move quickly,each sec-tor behaves differently,and every company is unique.We remain cau-tious,given the immediate macro challenges,but optimistic,given the unique opportunities we see in over-coverage areas.These pages will provide you some insights by sector on where we see the market trending.If you havent invested in clearly articulating your companys culture and what you stand for,then how can you expect your workers across various projects to embrace that and act according to your values?Pfeffer says that its important to take time to make sure employees are clear on whats driving their decisions and actions.“Culture is simply the actions people choose to take,”he says.“Our basic beliefs are that we have to operate from a basis of respect for the individual and we want to change the world.If youre trying to decide instantaneously,and you have got to process all these inputs,the clarity should be in our core values,our beliefs that help drive your decisions and actions.”One critical way to solve the labor challenge is by investing in training and development.Demonstrating to your employees that everyone is val-ued and taking an interest in making sure theyre getting the skills needed to advance in their careers will help retain the workers you have and attract the ones you need.“You have to continually recruit the people who work for you and invest in their futures.”Scott Winstead President FMI Consulting Tim Huckaby President FMI Capital Advisors5FMI 2023 NORTH AMERICAN ENGINEERING AND CONSTRUCTION INDUSTRY OVERVIEWDONT FORGET LESSONS LEARNED FROM PREVIOUS DOWNTURNSFor most of us,this isnt the first time weve had to manage through a down-turn.But during times like these,its helpful to remember important les-sons from previous recessionary envi-ronments.These include:Make timely decisions.During the last downturn,we heard from many clients that they made the right deci-sions,but they just didnt act quickly enough.Dont wait to make necessary changes to ensure you are imple-menting your strategy and going after work that reinforces your plans.Focus on your core competencies.Given the uneven outlook for differ-ent sectors in the industry,it might be tempting to move into a hot mar-ket.But doing so without proper research,thought and strategic plan-ning could have dire consequences.Be sure youre going after work that you know you can execute well and make money doing so.Concentrate on business develop-ment.Now is the time to stay close to your clients and truly listen to their needs.Equip your teams with the skills needed to continually win work on the differentiators you bring to the project.Simply reducing margins is often untenable but can be especially dangerous in a downturn.Invest in your people,processes and systems.While it is important to maintain fiscal discipline and a healthy balance sheet during leaner times,you cant neglect your people.Labor markets remain competitive,and you need to make sure you retain the critical talent to lead your busi-ness now and through the next eco-nomic cycle.Douglas said it best:“Having a stra-tegic plan is vitally important for any business right now.And if they dont have one,I would encourage them to really think hard about that strategic plan because were going to have to pull a lot of levers over the next few years just depending on certain con-ditions.And youve got to be ready for those.If something happens over here,youve got to be able to shift and pivot.And I think thats going to be the difference between compa-nies that get through whats going to happen in the next couple years and companies that really thrive.”U.S.Engineering and Construction OutlookLast year FMI altered its base case assumptions for our forecasts to include a recession in 2022 and 2023.As with historical contractionary cycles,the impact on the engineering and construction industry will be longer-lasting.Economic factors influencing this forecast include ongoing shortages of key materials and labor across various industries;challenges and opportunities associated with the reopening of international borders;geopolitical territorial and trade tensions;impacts and volatility in real estate,financial and equity markets associated with a deeply inverted yield curve,ongoing quantitative tightening and rate hikes;and continued inflationary pressures tied to heightened living expenses,energy costs,strength in the U.S.dollar and rising wages.There are also now multiple layers of interconnected government policy in place influencing new opportunities across various programs stemming from the Infrastructure Investment and Jobs Act(IIJA),the CHIPS and Science Act(CHIPS),a