FMI: 2014 Construction Put In Place Ends Strong
Commercial and manufacturing construction are two of the largest growth sectors, accounting for more than $111 billion in new construction. Randy Giggard, managing director of research services for FMI says, “With new and apparently sustainable sources of natural gas and shale oil, America is on the verge of a veritable manufacturing renaissance building petrochemical plants in the Gulf and gaining interest from more companies, especially foreign-owned companies, considering relocating manufacturing to America.”
Lodging has experienced the largest percentage increase for CPIP in 2014. It is expected to finish the year 24 percent up from 2013, building on last year’s 25 percent increase. This sector now accounts for nearly $17 billion in CPIP.
As for other areas of public infrastructure:
– Transportation: Transportation construction continues at a solid pace with 2014 projected to end up 5% and continue at 7% growth for 2015 to $44.7 billion. The improving economy has increased freight rail-car loadings, especially for minerals, petroleum and petroleum products, grain and automobiles. Record sales for Boeing are indicative of a strong aviation market. Intermodal, partnered projects like the recently completed Bechtel-led team for Phase 1 of the Dulles Corridor Metrorail Project may become the model for large metropolitan transportation systems.
– Sewage and Waste Disposal: The good news for sewage and waste disposal construction is that we expect modest growth from 3% to around 4% for the forecast period. That is an improvement over the last few leaner years, and growth may be helped in some industrial areas with a growing manufacturing sector. Nonetheless, this key sector will continue to compete with other infrastructure sectors for public funds.
– Water Supply: The need for improvements in our water supply is great, but the investment is lean. Our forecast calls for $13.7 billion to be spent on water supply construction in 2014 and growth of just 1% to $13.5 billion in 2015. The drought crisis in California may be instructive for the rest of the nation, as California will have to increase spending on water resources. According to Gregg Powell of FMI, “In today’s market, there is arguably no sector facing a more critical shortfall between demand and investment than the U.S. water market. The country’s water and wastewater infrastructure suffers from subpar conditions throughout the supply chain, encompassing water intake, diversion, transportation, storage, treatment and delivery.”
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