Industry Reports

4 Road & Highway Construction Industry Trends for the Next 5 Years

4 Road & Highway Construction Industry Trends for the Next 5 Years

In Ohio, we have two seasons: winter and construction.

Or at least that’s what we joke about. But there’s some truth to this statement; now that spring is in full bloom here in the Midwest, road and highway construction is underway.

Though it seems like it’s booming (especially to people like us in the Midwest), I started wondering: How is this industry really doing?

And will the future hold?

Here are four road and highway construction industry trends for the next few years from a recent industry report by John Madigan at IBISWorld.

1) The industry will continue to grow, but at a smaller annualized rate.

From 2013-2015, the road and highway construction industry grew at an annualized rate of 3.6%.  IBISWorld predicts that although industry growth will continue, the annualized rate will fall dramatically to 0.6% from 2018-2023.

Some reasons for this predicted decline include a shortage of local and state public investments and the winding down of post-Recession stimulus funding like the FAST Act.

Highway and roadway construction

2) The U.S. will need major infrastructure upgrades.

To point out the current state of our nation’s infrastructure, Madigan cites a 2017 report from the American Society of Civil Engineers where they gave the U.S. a grade of “D.” In short, the need for road and highway construction is greater than ever.

So, even if this industry’s revenue will decline and the growth will slow, it won’t stop altogether; local and state governments will continue to have a need to invest in their infrastructure.

3) We may see more public-private partnerships (PPPs) in the next five years.  

As we briefly discussed in our article last year about three major engineering and construction trends, PPPs are one way that public entities are funding infrastructure projects.

Though this trend is still in its infancy, it’s possible that local and state governments might pursue partnerships with private organizations as they face budget constraints and the aforementioned need for infrastructure upgrades.

4) To be successful in this industry, highway and road construction companies need to have the right workforce, suppliers, communication skills, and pricing policies.

Of the 250 Key Success Factors IBISWorld identifies, Madigan points out a few specific ones that construction companies who complete highway and road construction projects need to remain successful.

Access to a skilled workforce is key; so is working with the right material input suppliers. Communication is also important, especially if the PPP trend picks up. And perhaps most importantly, companies in this industry must have effective pricing policies to ensure their projects are completed on budget.