Consulting firm Deloitte recently released its outlook on the industry.
The construction industry added more than $900 billion to the US economy in the first quarter of 2020—its highest level since the 2008 recession. It employed 7.64 million people in February 2020, also the highest levels since 2008. Then, COVID-19 reached the United States, causing the industry to lose $60.9 billion in GDP and decreasing total jobs to roughly 6.5 million, effectively wiping out two years of GDP gains and four years of job gains.
The E&C industry, however, learned from the 2008 recession and was well-positioned to weather this economic shock. It had better control over its leverage and credit and created a buffer through additional cost savings. However, industry performance during the remainder of 2020 has been mixed. Some E&C companies were more exposed to COVID-19–affected segments (like retail and hospitality), while others were not able to capitalize on technology advancements. Most E&C companies continue to face sustained cost and margin pressures. Additionally, despite strong order books, companies are experiencing challenges such as project delays and cancellations, as well as difficulty obtaining permits. In addition, increases in the procurement costs of materials and equipment continue to stymie many E&C companies.
The good news is that there are reasons to be optimistic for the future of the engineering and construction industry. Connected technologies and an increase in associated investments may help firms realize new operational efficiencies. New business models and an increase in M&A activity are further accelerating the shift toward digital transformation in engineering and construction, as well as operational efficiencies. Also, E&C companies are likely to help other industries unlock the future of workplace solutions.