May 11, 2023
May 11, 2023
The construction technology industry remained resilient in adverse economic conditions across the world. Investments during 2022 held steady at around $5.38 billion, just under the $5.4 billion from 2021. The (increasing) investments in Contech might be strongly tied to the increasing number of job openings.
We at The Proptech Connection are seeing a significant increase in integrated developers and major corporates wanting to leverage technology to find efficiencies in their processes. Our advisory puts economics, megatrends and functional use cases at the core of our process.
In recent years, the construction industry has experienced a significant increase in job openings, fueled by a combination of factors such as population growth, urbanization, and the need for infrastructure improvements. From large-scale commercial projects to residential developments, the demand for skilled construction workers has been steadily rising, making it one of the fastest-growing job sectors in many countries around the world (!).
According to the Bureau of labour statistics, construction employment in the United States increased on average by 2.5% since March 2022. In 44 states the employment rate went up, with Rhode Island being the absolute winner with 11.9%! Other states with a high employment increase are Nevada, Montana, Nebraska, and Oregon. West Virginia on the other hand had a decrease in job openings between March 2022 and March 2023 of 7.5%.
Since the beginning of 2022, the number of job openings started to become bigger than the number of hires. This gap became bigger as the year progressed and in February 2023 there are 69.000 more job openings (384.000) in the construction sector than new hires (315.000).
Ever since 2020, the consumer price index of nonresidential construction has been slowly increasing, while the producer price index on the other hand saw a faster increase till June 2022 and is slowly coming down since then. However, not all producer prices are cooling down. Cement PPI for example is still 17% higher than a year ago. Also, subcontractors are still much more expensive than they used to be. Under the subcontractors, roofing contractors are taking the lead with 19.5%! Over the past year, the overall spending on construction increased in almost every sector, except for single-family residential.
So what does the future look like for the sector?
The outlook for the construction sector is generally positive, with continued growth and opportunities for job seekers in many parts of the world. There are several factors driving this positive outlook. Population growth and urbanization are expected to continue, leading to increased demand for new housing, commercial buildings, and infrastructure. In addition, there is a growing focus on sustainability and energy efficiency in the construction industry, which is leading to increased investment in green building practices and technologies. This shift towards sustainable construction is creating new opportunities for construction companies and workers with specialized skills in areas such as renewable energy, energy efficiency, and green building design.
Worldwide the construction industry is expected to grow. From 2021 to 2028 the construction industry is expected to grow at a CAGR of 5.6% in the US, a CAGR of 3.8% in Europe, and 6.3% in Asia-Pacific. If these numbers remain this high the future is to be seen. The population (in the US) is growing slower and slower. Additionally, the shift to e-commerce is still going, reducing the need for stores, just as the digitalization of a number of healthcare facilities. The future of the office is also unsure.
Next to that, the construction sector is also facing other challenges, such as shortages of skilled workers and rising material costs. As mentioned above, the material costs are cooling down in numerous materials. The lack of construction workers remains a bigger problem. Attempts of getting more workers excited for construction jobs are being done, but are often unsuccessful.
Many construction companies and trade organizations offer apprenticeship programs that provide on-the-job training and classroom instruction to individuals looking to learn a skilled trade. These programs offer a pathway to a career in construction and provide opportunities for career advancement. Also, some community colleges and vocational training centres offer construction-related courses and programs, such as plumbing, electrical work, and HVAC (heating, ventilation, and air conditioning) installation. These programs provide individuals skills and knowledge needed to work in the construction industry.
Moreover, some governments and organizations are investing in technology and innovation to make the construction industry more attractive to young workers. This includes the adoption of digital tools and software, such as Building Information Modeling (BIM), which can make the construction process more efficient and reduce the physical demands of the work. There are also efforts to integrate sustainable and green building practices into the construction industry, which can appeal to workers who are interested in environmentally responsible work. Additionally, the use of drones and robotics can help to improve safety and efficiency on construction sites.
Women are underrepresented in the construction industry, but efforts are being made to increase their participation. Organizations such as the National Association of Women in Construction (NAWIC) and Women Construction Owners & Executives (WCOE) are working to support women in the industry through mentorship, networking, and advocacy.
Overall, the outlook for the construction industry is still positive. There is work to do, but it’s absolutely possible to keep it booming!