The construction economies of the United States and Canada are moving on a future trajectory, but at different speeds and with a few key differences, according to a 2022 economic outlook series.
As North America’s construction and engineering industries felt the impact of both the pandemic and a short-lived recession in 2020, Deloitte’s 2022 industry outlook report engineering and construction shows strong growth due to both a federal infrastructure plan and underlying industry trends.
The report cited data from the US Census Bureau and said that “the industry has responded very well during the pandemic and has been strong during the recovery period. Total construction spending rebounded to a peak of $ 1.57 trillion in July 2021, a record high for the series and 12% above 2019 average levels. “
Deloitte also conducted a recent survey in which 91 percent of engineering and construction respondents rated the business outlook for their industry as “somewhat or very positive,” with an increase of 23% from the previous year. The Builders and Associate Contractors Construction Confidence Index, which had fallen to 38.1% in March 2020, recovered and remained at levels of over 60% in the first half of 2021.
Residential activity and non-residential growth due to the US $ 1 trillion Infrastructure Investment and Jobs Act (IIJA) were cited as the main drivers of the construction economy.
“Looking at the two segments in more detail, residential business has remained strong despite rising material prices and the spread of the Delta coronavirus variant. The segment posted record spending levels of around $ 770 billion in July 2021, 27% more than last year and almost 30% more than pre-pandemic levels, ”the report said.
A blog post on the Economic Outlook for the Business Development Bank of Canada (BDC) 2022 by BDC Vice-President Pierre Cleroux gave a more discreet assessment of Canada’s economic outlook for 2022. The pandemic is “in full swing part under control for the moment, ”he said, but“ the economy is still facing the adverse consequences of the pandemic, which will continue until 2022 and consequently moderate growth in the country. “
“The Canadian economy is expected to continue to grow, but the gains will be more modest than expected at this point in the economic cycle,” said Cleroux.
Growth in non-residential spending in the United States remained weak through most of 2021, with spending on educational, office, transportation, health care and commercial facilities posting the largest drop in a year on the other in July 2021. Spending $ 550 billion through the IIJA over the next five years on upgrading roads, bridges and other major infrastructure projects, passenger rail and freight , hydraulic infrastructures and public transport will give a significant boost.
Potential obstacles for the engineering and construction industries include supply chain disruption and supply challenges, as the pandemic has exposed the weakness of the current system, according to the Deloitte report. Pent-up demand for key materials as global construction activity picked up was one of the reasons cited for the disruption as well as the movement of materials due to increased congestion at major ports.
Leroux said supply chain issues will persist in Canada through 2022.
“When bottlenecks affect upstream products, such as energy products and metals, the scarcity of these products will lead to greater spillover effects by restricting the production of other goods,” he said. declared.
A Construction Industry Outlook 2022 report from HUB Construction Insurance and Risk Services said supply chain issues could become the new normal in Canada.
“The key to alleviating supply chain issues is resilience: engaging with suppliers, building material reserves, and developing back-up suppliers. It is also important to reconsider the reliance on overseas manufactured supplies and just-in-time material sourcing, which makes it important to establish local and regional suppliers where possible, ”said perspective.
Ongoing labor shortages were another source of concern for the industry as the New Year dawned, compounded by job losses in the early stages of the pandemic.
“As of August 2021, the industry had yet to recover around 20% of the jobs lost due to the pandemic, while many other industries competing with the workforce, such as transportation and warehousing , had recovered all the lost jobs, ”the report said.
Another factor compounding workforce issues is the lack of qualified candidates, according to the Deloitte report, as the industry undergoes technological change and demand for data engineers, data scientists, coders and developers increases.
“Penetration of digital technologies requires workforce optimization both in terms of the skills needed to do the job and knowledge of digital technologies such as digital twins, smart project management and connected construction.” , says the Deloitte report.
The HUB Construction Outlook cited data from BuildForce Canada which read: “By 2030, the average Canadian construction worker will be 42, and young people are not lining up to work in construction.”
“Over the next decade, companies will need to recruit nearly 310,000 construction workers to replace those who are retiring and keep up with demand; one report estimates the industry could run out of 81,000 workers by 2030, ”the prospect said citing Canada Immigration News.
The technology has also benefited engineering and construction companies, as digital supply networks, building information management, predictive maintenance, asset tracking, and modular and prefabricated construction are on the rise.
“In 2022, connected construction is likely to be a catch-all for major digital investments to connect, integrate and automate operations and bring the entire value chain on a secure and intelligent infrastructure. Growing demands on digital and technological capabilities in the commercial construction segment are also likely to drive adoption, ”the Deloitte report noted.
BDC’s economic outlook cited increased investment in technology and automation as a solution to the continuing labor shortage.
“Automation isn’t just about robots. It is any technology that performs repetitive tasks with minimal human intervention. Automation frees workers for value-added tasks. It can be as simple as using software to automate sales forecasting and customer service, or it can be as complex as using computerized machining tools to automate a machine shop, ”Cleroux said. .
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