Pent-up demand exists in all markets covered by the publications in the Scranton Gillette/SGC Horizon stable. All markets are poised to move forward, hopeful that 2013 will be more than a transition year to robust construction activity and growth, but maybe even a full year of solid business activity.
Although all of the markets fell short of expectations last year, each looks at 2013 as a rebound year. Thewater infrastructure market—water, waste and stormwater—is joined by the remodeling market in leading expectations for 2013. Nonresidential construction, home building, and fleet asset managers are a bit less optimistic, but still predict a far better year than last year.
Home building, according to many, holds the key not only to the overall economic recovery, but also to construction. If ever there were a market poised to explode, it is residential home building. Home builders expect 2013 to be a better year, although many factors still hold back a return to solid, sustainable growth.
Nearly half of the country bumped up expectations for this year, with the exception of the Mid-South and Pacific states saying business will likely be similar to 2012. The most optimistic forecasts come from the Northern and Southern Plains states, reporting an average business year in 2013.
Contract volume expectations are in the double digits for 2013, following no growth in 2012. Overall, construction revenue expectations are a net of 31.5% (48.3% expecting growth minus 16.8% expecting a decrease in revenue for 2013).
Remodeling was the exception last year and leads all markets this year with a net contract volume prediction of 58.7%. All other markets expect net growth, too: transportation, 13.9%; fleets, 19.1%; water, 29.6%; home building, 32.4%; and nonresidential, 42.8%
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Competition for construction projects will be keen, with 16.5% of respondents reporting intensely competitive markets. An additional 47.7% said they are operating in very competitive situations.
Bid prices will increase this year, with a net 49.6% (56.5% expecting bid prices to be up minus 6.9% expecting them to be down). The exception, and one to consider, comes from equipment managers, reporting a net of 31.8% (43.8% expect bids to be up vs. 12% saying they will be down). Equipment rates are a major factor in bid pricing.
Material prices also affect bid pricing, and the industry overwhelmingly expects increases in this area, with a net of 80% (81.3% prices to increase vs. 1.3% that expect they will go down).
Firm health remained steady in 2012, with half of respondents reporting very good or good overall health for their firm, the same as was reported in 2011. Residential firms were lower, with a net of about 40%. Water firms were the healthiest, at a net of 62%, and transportation firms reported a net of 57%.
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