Let’s Build It!

Jennifer Nietz - Manager of Operations

May 2014 – Over the last several months we have noticed a general trend across multiple industries; every plan and initiative is either delayed or moving slower than anticipated.  However, over the last 3 weeks we are seeing a boom in new project proposals and new infrastructure being built.  Why is this?  After reviewing several articles, most columnists are blaming the winter weather for over 50% of economic “freeze” that was occurring. In a report discussing the effects of recent weather conditions on economic activity, Goldman Sachs economist David Mericle estimates that a bit more than half of the slowdown has been caused by transitory weather-related factors. He expects GDP to take a 0.5 percentage point hit in the first quarter, but expects a subsequent 0.5-0.75 percentage point boost in Q2.

The good news? We are seeing a turnaround across all industries! This month I have some very exciting news regarding the industrial building construction industry. The industry is composed of contractors that are primarily responsible for the construction (e.g. new work, additions, alterations, maintenance and repairs) of industrial and manufacturing buildings. Establishments include general contractors, design-build companies and construction management operators.  Over the past five years this industry has seen an annualized decline of over 2% yearly.  However, over the next 5 years is expecting an annualized growth of over 2%.  Private investment into growth is actually going to spike over the next 2 years going into 2016.

Private Investment in Manufacturing Structures

According to IBISWorld, growth is expected to continue over the next five years as operators benefit from an improved economy and the reinvestment of corporate profit into new manufacturing and distribution structures. Foreign demand for US goods is also expected to support industry growth. Additionally, foreign companies have expanded their manufacturing operations in the United States to be closer to their end-consumers. As a result, demand for new or remodeled industrial space is set to rise as manufacturers and industrial companies look to expand production, boosting industry revenue by an estimated 3.2% in 2014.

We are very excited regarding the growth we are seeing and are very interested in your success as well, as the climate continues to improve.

Questions or comments? Please contact Jennifer Nietz at jnietz@teamCOACT.com.