Strong turnout at AHR Expo reflects industry recovery
At last month’s AHR Expo, I spoke with several manufacturers who took the show’s strong turnout as a good sign the economy finally is coming to life. While I wouldn’t go so far as to base an economic forecast on the first two days at one trade show, I was encouraged to see so many people clogging the aisles of Chicago’s McCormick Place.
Unscientific though it may be, equating the show’s attendance with industry growth supports the forecast found in consultant FMI’s “2012 U.S. Markets Construction Overview.” Along with identifying trends that will affect engineering and design firms – which we discussed last month – FMI predicts beginnings of a recovery in certain market sectors.
Overall, FMI expects the construction industry to grow 6% in 2012. If your glass is half full, this outlook is rosy compared with the 2% growth FMI projected for 2011. If your glass is half empty, this forecast falls short of the 10% to 12% increases you grew accustomed to seeing until a few years ago.
FMI breaks down its 2012 nonresidential construction forecast into sectors. These include:
Education. Construction is expected to increase 4% after a 13% drop in 2010 and 2% dip last year. Much could depend on whether Congress passes the American Jobs Act or the education part of it. Up to $30 billion could be available for modernizing public schools ($25 billion) and community colleges ($5 billion).
Greener schools that use energy and water more efficiently will continue to be a strong trend with more universities committed to building only LEED-certified facilities.
Health care. While the 3% growth forecast for this year seems small, the health care construction sector remains at a historically high level. A large percentage of the activity taking place is for renovating and modernizing existing facilities. Helping to shape these projects are the country’s aging population, new technologies and increased demand for single-bed hospital rooms.
Some expansion plans are being delayed by uncertainty about the health care reform act. Financing and declining revenue sources present other obstacles to greater growth.
Sewage and waste disposal. Construction is expected to increase at a faster pace than the overall economy through 2015 after a drop of 2% last year. Government mandates will drive much of this work. The nation needs to replace or upgrade 16,000 wastewater systems that discharge more than 850 billion gallons of untreated sewage into surface waters each year.
Water supply. After a 2% dip in 2011, construction is predicted to rise 4% this year. The emphasis on green buildings and water efficiency will continue, but attention also must be given to systems that provide clean water. These two issues are not mutually exclusive.
Government failure to replace old systems causes us to lose 7 billion gallons of clean drinking water to leaking pipes each day. Green building practices, such as controlling storm water runoff to increase ground water supplies, will become the norm in new construction.
While recovery this year will be slower than anyone would like, construction activity in these sectors indicates we’re moving in the right direction. The crowds in the aisles at the AHR Expo represent one more positive sign.