Siemens Predicts Rapid Uptick for the Construction Industry

Siemens, the worldwide technology company for systems and projects, has concluded research that predicts a boom in the future for the construction industry.

While the industry has faced challenges in recent years, including supply chain disruptions and inflationary pressures, several indicators suggest a more positive outlook is on the horizon.

The Building Cost Information Service (BCIS) has now predicted over the next five years, total new work output is forecast to grow by 21%.

The civil engineering sector for example has demonstrated remarkable financial performance over the past five years, with several firms experiencing substantial share price appreciation, some companies even seeing value double. 

This anticipated surge is expected to drive a corresponding rise in demand for plant-hire services across various categories, including: excavation, pumping, piling, bulldozing, lifting, and earth-moving equipment.

The forecasted expansion presents a compelling opportunity for stakeholders in the plant-hire sector to capitalise on this positive market sentiment and prepare for increased business activity.

So far, several major construction companies are positioned to benefit from and contribute to this potential upturn, including: Vinci SA, Bechtel Corporation, China State Construction Engineering Corporation, Bouygues Construction and Skanska AB.

What is driving the upturn?

Globally, many governments worldwide are increasing investments in infrastructure projects as part of economic stimulus plans. For instance, the US Infrastructure Investment and Jobs Act, is allocating significant funding for roads, bridges, and other critical infrastructure.

Primarily, the anticipated upturn in the construction industry is thought to be driven by increasing infrastructure investments and government stimulus programs aimed at economic recovery and modernisation.

How will this upturn affect the construction industry?

The anticipated upturn is poised to have far-reaching effects on the global market, manifesting in various ways across different regions and sectors. 

The construction industry's cyclical nature often serves as an example for broader economic trends. As developed markets show signs of recovery and emerging economies continue to urbanise, we can expect a ripple effect across the worldwide construction landscape.

Anticipated key manifestations:

Infrastructure development: This could lead to a surge in large-scale projects such as transportation networks, energy facilities, and urban redevelopment initiatives.

Technological integration: The upturn is expected to accelerate the adoption of cutting-edge technologies. Building Information Modelling (BIM), drone surveying, and prefabrication techniques may see widespread implementation, enhancing efficiency and reducing costs.

Sustainability focus: With growing environmental concerns, the industry may pivot towards more sustainable practices. This could manifest in increased demand for green building materials, energy-efficient designs, and eco-friendly construction methods.

Skills gap and labour market: A boom in construction activity may exacerbate existing skills shortages, potentially driving up labour costs and spurring investment in training and automation.

Supply chain reconfiguration: Global supply chains may undergo significant restructuring to meet increased demand and mitigate risks exposed by recent disruptions, potentially leading to more localised production of construction materials.

Mergers and acquisitions: The positive outlook may catalyse consolidation within the industry as firms seek to expand their capabilities and geographical reach through strategic acquisitions.

Emerging market opportunities: Rapid urbanisation in developing countries is likely to create substantial opportunities for both local and international construction firms, particularly in residential and commercial sectors.

Regulatory landscape: Increased activity may prompt regulatory bodies to review and update building codes and standards, potentially leading to more stringent safety and quality requirements.

Financial implications: The predicted upturn is expected to have significant financial ramifications. Construction firms may see improved profit margins, while ancillary industries such as building materials, equipment manufacturing, and real estate could also benefit from the positive momentum.

As the industry moves forward, sustainability, digitalisation, and adaptability will likely be key themes shaping its trajectory. Construction firms that can effectively integrate these elements into their operations may be best positioned to thrive in the evolving landscape.

Roland Busch, President and CEO of Siemens AG says: “we have the right strategy, the right technology, and the right team to support our customers in becoming more competitive, resilient and sustainable”, in the hopefully, evolving construction industry.

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