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A new year, new government leadership and new outlooks are in focus for construction in January. This month we take a closer look at some of the initial impacts for contractors and what the future may hold.
It’s only been roughly a week since Joe Biden’s inauguration as the 46th president of the United States, but already he’s issued a flurry of executive orders and kick-started initiatives that could have wide-ranging impacts on the construction industry. Here’s just a few examples:
Total construction starts dropped 10% in 2020 to $766.3 billion - the lowest mark in five years. COVID clearly played a lead role in the drop as businesses across the world had to pause or significantly adapt during the pandemic. Reports indicate that nonresidential construction building is expected to see continued declines through 2021 as well. A 5.7% decline in construction spending in 2021 has been projected by the American Institute of Architects, though by 2022, it’s expected that growth of at least 3% could occur. Despite the figures and projections, there’s still high levels of confidence in the industry - especially among civil contractors. A recent report from Dodge Data & Analytics noted that more than half of civil contractors were highly optimistic about their business prospects over the next 12 months, buoyed by expectations of significant infrastructure projects coming to fruition in the year ahead.
The Takeaway: Until COVID can be more contained, business in all sectors will see extended challenges. The good news for construction is that there appears to be no shortage of work in the future. This does put extra demand though on contractors to get projects done quicker and more cost effectively in order to meet modern demand and backlog. Yet another reason why we’re seeing so many contractors shift toward modernizing their operations — taking advantage of slow downs to scale their business for an expected boon in the near future.
While federal infrastructure spending packages continue to be debated, New York Gov. Mario Cuomo is moving ahead with his own 2021 infrastructure plan. The $306 billion spending plan would include $51 billion in transit redevelopment of Manhattan's Midtown West area and the continued modernization of New York airports and other transportation projects. The plan also earmarks billions of dollars for upstate New York transportation projects. Cuomo called the plan, "the largest, most ambitious plan put forward by any state in the nation.”
The Takeaway: This is a key indicator that 2021 will be the start of major infrastructure improvements throughout the United States. We’ve seen a number of smaller spending packages create new opportunities for contractors across the country in recent years, but between federal and state spending bills — if approved — we could see the floodgates of new work opening. Of course, the best of these projects will go to civil and heavy highway contractors that can prove they are poised to handle the workloads and meet modern demands.
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