Professional Documents
Culture Documents
WWW.IBISWORLD.COM
Commercial Building
Construction in the US
July 2012
Andrea Alegria
17 International Trade
33 Key Statistics
Industry Definition
18 Business Locations
33 Industry Data
Main Activities
Similar Industries
20 Competitive Landscape
Additional Resources
33 Annual Change
4 Industry at a Glance
33 Key Ratios
5 Industry Performance
23 Barriers to Entry
Executive Summary
24 Industry Globalization
Current Performance
Industry Outlook
25 Major Companies
29 Operating Conditions
29 Capital Intensity
13 Supply Chain
31 Revenue Volatility
15 Demand Determinants
32 Industry Assistance
16 Major Markets
WWW.IBISWORLD.COM
Main Activities
Similar Industries
23 Construction in the US
Operators in this industry perform specialized construction work.
23611a Home Builders in the US
Establishments in this industry primarily construct residential buildings.
23611b Apartment & Condominium Construction in the US
Industry establishments construct residential buildings.
23331 Industrial Building Construction in the US
This industry constructs industrial buildings.
23493 Heavy Industrial Facilities Construction in the US
Establishments in this industry construct non-building structures, such as industrial processes, power plants
and blast furnaces.
53 Real Estate and Rental and Leasing in the US
Industry operators finance and develop commercial property.
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Similar Industries
continued
Additional Resources
IBISWorld
WWW.IBISWORLD.COM
Industry at a Glance
Commercial Building Construction in 2012
Key Statistics
Snapshot
Revenue
Profit
Wages
Businesses
$105.9bn -13.4%
6.8%
$74.0bn 29,012
$1.9bn
Consumer spending
% change
There are no
Major Players in
this industry
20
10
% change
Market Share
10
20
30
40
Year 04
1
0
1
06
08
10
Revenue
12
14
16
18
Year
06
08
10
12
14
16
18
Employment
SOURCE: WWW.IBISWORLD.COM
p. 25
7%
10%
Consumer spending
Other non-building
construction activities
Construction
management services
1%
Other business
activities
National
unemployment rate
S&P 500
Yield on 10-year
Treasury note
15%
Remodeling
contracting
67%
General contracting
p. 5
SOURCE:
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SOURCE:
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Industry Structure
Mature
Regulation Level
Heavy
High
Technology Change
Low
Barriers to Entry
Low
Industry Globalization
Low
Competition Level
High
Industry Assistance
None
Concentration Level
Low
FOR ADDITIONAL STATISTICS AND TIME SERIES SEE THE APPENDIX ON PAGE 33
Medium
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Industry Performance
Businesses
Consumer spending
Consumer spending, as an indicator of
the total amount spent by Americans
on services and new goods as well as
net purchases of used goods, directly
impacts US businesses. High consumer
spending contributes to business
expansion, which fuels demand for new
office buildings, new retail spaces, such
as stores and shopping centers, and
new hotels. Consumer spending also
drives demand for construction of
WWW.IBISWORLD.COM
Industry Performance
Consumer spending
4
16
15
14
13
% change
11
1
2
Year
12
10
06
08
10
12
14
16
18
Year 04
06
08
10
12
14
16
18
SOURCE: WWW.IBISWORLD.COM
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Industry Performance
Current
Performance
Ripple effect
Revenue declines
Industry revenue
10
% change
0
10
20
30
40
Year 04
06
08
10
12
14
16
18
SOURCE: WWW.IBISWORLD.COM
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Industry Performance
Revenue declines
continued
Profit drops
Revenue
plummeted in
2009 and 2010 as industry
backlogs ran low and new
projects slowed greatly
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Industry Performance
Diversification helps
contractors
Industry
Outlook
The
WWW.IBISWORLD.COM
Industry Performance
Delay in recovery
Enterprise
growth will
remain slow as the amount
of mergers and acquisitions
increases
level of merger and acquisition activity
to increase market share.
Industry profit margins will improve
gradually and reach a peak of 9.3% in
2017, as price for construction services
remain unscathed by poor demand and
an unsound business environment. A
more stable world economy will also
mitigate wide fluctuations in the cost of
construction materials; however, energy
costs will remain volatile.
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Industry Performance
Life Cycle Stage
%Growthofprofit/GDP
Maturity
30
QualityGrowth
Company
consolidation;
level of economic
importance stable
25
KeyFeaturesofaMatureIndustry
Revenue grows at same pace as economy
Company numbers stabilize; M&A stage
Established technology & processes
Total market acceptance of product & brand
Rationalization of low margin products & brands
20
15
QuantityGrowth
10
CommercialBuildingConstruction
GlassProductManufacturing
Shake-out
GasStationswithConvenienceStores
Decline
Crash or Grow?
10
10
Shake-out
IndustrialBuildingConstruction
PotentialHiddenGems
TimeWasters
MunicipalBuildingConstruction
Future Industries
Hobby Industries
CementManufacturing
10
15
20
25
30
%Growthofestablishments
SOURCE: WWW.IBISWORLD.COM
WWW.IBISWORLD.COM
Industry Performance
industry
is Mature
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Supply Chain
44711
45211
52593
53
71
72
32721
32731
32733
32799
42
42381
52
53241
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7%
10%
Other non-building
construction activities
Construction
management services
15%
Remodeling
contracting
Total $105.9bn
Products and Services
The Commercial Building Construction
industrys principal activity is to
provide prime contracting services in
the construction of commercial
buildings. Industry firms operate as
general contractors (GCs) or designbuilders; specialist remodeling
contractors; specialist construction
management firms; and contractors
that supply other non-building
construction services (e.g. excavation
and site preparation) and nonconstruction activities (e.g. land sales).
General contractors and design-builders
About 67% of industry revenue is
derived from general contracting and
design-building activities related to new
construction. Typically, construction
firms obtain contracts through
tendering or quoting a price accepted by
the property developer. Contracts
normally require that the GC oversee all
aspects of the project from quantity
surveying, material purchase, skilled
labor and subcontractor recruitment
and construction to the lockup stage,
which is the period before construction
begins. The GC is expected to consult
with project architects, financial
providers and building regulators.
1%
Other business
activities
67%
General contracting
SOURCE: WWW.IBISWORLD.COM
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Demand
Determinants
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Demand
Determinants
continued
Major Markets
8.1%
Lodging
15%
Amusement
42.9%
Retail and
warehouse
Total $105.9bn
34%
Office
SOURCE: WWW.IBISWORLD.COM
Office buildings
In 2012 the office construction sector will
constitute an estimated 34.0% of the
value of total commercial building
construction. Office construction was
hindered by the recession as businesses
contracted and the need for additional
office space declined. Commercial
lending also tightened during the
downturn, making it hard for businesses
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Major Markets
continued
International Trade
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West
New
England
AK
0.5
Great
Lakes
WA
ND
MT
2.5
Rocky
Mountains
ID
OR
1.4
West NV
1.2
1.8
SD
0.4
WY
0.8
MN
0.4
0.4
Plains
1.1
UT
CO
1.1
KY
1.0
OK
1.6
NC
3.1
TN
AZ
NM
2.1
0.9
Southwest
TX
7.7
HI
0.5
2 NH
3 MA
4 RI
5 CT
6 NJ
7 DE
8 MD
0.2
1.0
0.4
2.8
2.1
0.2
SC
Southeast
1.0
MS
AL
1.6
1.4
GA
3.7
0.9
LA
1.6
FL
6.3
Establishments(%)
0.3
2.1
AR
0.4
1.7
11.2
WV VA
2.7
1.3
2.1
CA
West
3.4
MO
KS
2.1
OH
1.9
3.6
IN
3.7
0.6
PA
2.8
IL
0.4
1 2
3
NY
6.1
5 4
MI
1.5
IA
NE
0.3
WI
ME
MidAtlantic
9 DC
0.2
Lessthan3%
3%tolessthan10%
10%tolessthan20%
20%ormore
SOURCE: WWW.IBISWORLD.COM
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20
10
Southwest
Southeast
Rocky Mountains
Plains
New England
Mid-Atlantic
Great Lakes
0
West
Percentage
Business Locations
Establishments
Population
SOURCE: WWW.IBISWORLD.COM
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20
Competitive Landscape
in
this industry is Low
identifies
250 Key Success
Factors for a
business. The most
important for this
industry are:
Cost Structure
Benchmarks
Establishmentsbyemploymentsize
No. of persons
1 to 4
5 to 9
10 to 19
20 to 49
50 to 99
100 to 249
250 to 499
500 to 999
1,000+
Total
46.6
18.9
16.3
12.1
3.8
1.8
0.4
0.1
0.1
100.0
Ability to negotiate
successfully with regulator
It is important to have construction
managers who have sound
Profit
Industry profit as a measure of earnings
before interest and taxes (EBIT)
continues to be constrained by
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21
Competitive Landscape
Sectorvs.IndustryCosts
AverageCostsof
allIndustriesin
sector(2012)
100
IndustryCosts
(2012)
1.8
10.7
Profit
Wages
Purchases
Depreciation
Marketing
Rent&Utilities
Other
80
Percentage of revenue
Cost Structure
Benchmarks
continued
43.2
69.9
60
40
30.2
20
2.0
3.7
9.5
0.7
21.8
0.5
2.0
3.0
1.0
SOURCE: WWW.IBISWORLD.COM
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22
Competitive Landscape
Cost Structure
Benchmarks
continued
Basis of Competition
Level & Trend
ompetition
C
in this
industry is High and
the trend is Steady
Purchases
On large-scale projects, the prime
contractor is directly responsible for most
material purchases and negotiates
directly with suppliers for discounted
prices. On small-scale projects,
subcontractors are typically responsible
for completing discrete segments of
construction, including the supply of
materials. Overall, purchases account for
about 21.8% of total industry revenue.
Purchase costs often fluctuate with
commodity prices, with most costs
related to ready-mixed concrete, glass,
structural steel, concrete panels,
Other costs
The industry has a low level of
depreciation due to its reliance on leased
vehicles and subcontractors. Additionally,
a low level of costs is related to rent and
utilities. Other operating expenses absorb
about 2.0% of annual industry revenue
and include communication charges
(particularly cell phones), repairs to
machinery and buildings, rental costs of
buildings and machinery, accounting,
information technology, and legal service
costs. Other costs include professional
expenses, insurance premiums, and
general administration outlays. Marketing
costs account for about 1.0% of revenue
for this industry.
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23
Competitive Landscape
Basis of Competition
continued
Barriers to Entry
BarrierstoEntrychecklist
Competition
Concentration
Life Cycle Stage
Capital Intensity
Technology Change
Regulation & Policy
Industry Assistance
Level
High
Low
Mature
Low
Medium
Heavy
None
SOURCE: WWW.IBISWORLD.COM
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24
Competitive Landscape
Industry
Globalization
Level & Trend
lobalization
G
in
this industry is
Low and the trend
is Increasing
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Major Companies
Other Companies
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Major Companies
Other Companies
continued
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Major Companies
Other Companies
continued
Skanska AB
Gilbane Inc.
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Major Companies
Other Companies
continued
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Operating Conditions
Level
The level
of capital
intensity is Low
Capital intensity
Economy
Construction
Commercial
Building
Construction
ToolsoftheTrade:GrowthStrategiesforSuccess
InvestmentEconomy
Recreation,PersonalServices,
HealthandEducation. Firms
benefit from personal wealth so
stable macroeconomic conditions
are imperative. Brand awareness
and niche labor skills are key to
product differentiation.
Information,Communications,
Mining,FinanceandReal
Estate.To increase revenue
firms need superior debt
management, a stable
macroeconomic environment
and a sound investment plan.
GlassProduct
Manufacturing
TraditionalServiceEconomy
GasStationswith
ConvenienceStores
WholesaleandRetail. Reliant
MunicipalBuilding
on labor rather than capital to
Cement
Construction
sell goods. Functions cannot Commercial
Manufacturing
be outsourced therefore firms
must use new technology
or improve staff training to
increase revenue growth.
Industrial
Building
Construction
Building
Construction
ChangeinShareoftheEconomy
CapitalIntensive
LaborIntensive
NewAgeEconomy
OldEconomy
AgricultureandManufacturing.
Traded goods can be produced
using cheap labor abroad.
To expand firms must merge
or acquire others to exploit
economies of scale, or specialize
in niche, high-value products.
SOURCE: WWW.IBISWORLD.COM
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Operating Conditions
Technology
& Systems
Level
The level
of
Technology Change
is Medium
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Operating Conditions
Level
The level
of
Volatility is High
VolatilityvsGrowth
1000
Revenuevolatility*(%)
Revenue Volatility
Hazardous
Rollercoaster
100
CommercialBuilding
Construction
10
1
0.1
Stagnant
30
10
BlueChip
10
30
50
70
Fiveyearannualizedrevenuegrowth(%)
* Axis is in logarithmic scale
SOURCE: WWW.IBISWORLD.COM
Regulation is
Heavy and the
trend is Steady
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Operating Conditions
Industry Assistance
Level & Trend
he level of
T
Industry Assistance
is None and the
trend is Steady
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Key Statistics
Industry Data
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Sector Rank
Economy Rank
Industry
Revenue Value Added Establish($m)
($m)
ments
177,342.8
94,169.0
31,189
187,885.0
94,694.1
30,873
190,511.2
96,589.2
31,165
201,610.3 103,688.2
31,603
217,759.3 104,524.5
32,293
224,888.6 111,117.5
32,664
158,142.0
91,406.1
32,212
110,197.5
80,774.8
31,816
103,749.9
76,048.7
31,537
105,880.0
79,332.4
32,349
111,796.0
85,455.5
33,149
120,188.6 100,777.3
33,599
129,924.7 102,112.9
34,909
139,737.8 107,981.2
36,329
147,080.5 120,968.8
36,610
4/36
2/36
14/36
75/706
27/706
159/705
Enterprises Employment
28,467
393,369
27,971
395,318
27,853
407,020
28,343
430,598
28,897
447,005
28,461
447,684
28,382
380,747
28,009
349,319
28,186
334,927
29,012
351,673
29,664
373,829
29,759
414,202
30,758
451,480
31,983
466,831
32,230
499,509
14/36
9/36
148/705
99/706
Exports
---------------N/A
N/A
Imports
---------------N/A
N/A
Wages
($m)
85,301.8
85,299.8
87,063.5
93,607.6
93,636.5
99,873.0
83,499.0
75,264.9
70,861.2
74,038.4
79,865.7
94,767.8
95,616.6
100,994.3
113,614.7
2/36
17/706
Enterprises Employment
(%)
(%)
-1.7
0.5
-0.4
3.0
1.8
5.8
2.0
3.8
-1.5
0.2
-0.3
-15.0
-1.3
-8.3
0.6
-4.1
2.9
5.0
2.2
6.3
0.3
10.8
3.4
9.0
4.0
3.4
0.8
7.0
12/36
10/36
105/705
53/706
Exports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Imports
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Wages
(%)
0.0
2.1
7.5
0.0
6.7
-16.4
-9.9
-5.9
4.5
7.9
18.7
0.9
5.6
12.5
13/36
106/706
Annual Change
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Sector Rank
Economy Rank
Industry
EstablishRevenue Value Added
ments
(%)
(%)
(%)
5.9
0.6
-1.0
1.4
2.0
0.9
5.8
7.3
1.4
8.0
0.8
2.2
3.3
6.3
1.1
-29.7
-17.7
-1.4
-30.3
-11.6
-1.2
-5.9
-5.9
-0.9
2.1
4.3
2.6
5.6
7.7
2.5
7.5
17.9
1.4
8.1
1.3
3.9
7.6
5.7
4.1
5.3
12.0
0.8
30/36
19/36
18/36
414/706
222/706
159/705
Key Ratios
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
Sector Rank
Economy Rank
IVA/Revenue
(%)
53.10
50.40
50.70
51.43
48.00
49.41
57.80
73.30
73.30
74.93
76.44
83.85
78.59
77.27
82.25
1/36
16/706
Imports/
Demand
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Exports/Revenue
(%)
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
N/A
Revenue per
Employee
($000)
450.83
475.28
468.06
468.21
487.15
502.34
415.35
315.46
309.77
301.08
299.06
290.17
287.78
299.33
294.45
7/36
300/706
Wages/Revenue
(%)
48.10
45.40
45.70
46.43
43.00
44.41
52.80
68.30
68.30
69.93
71.44
78.85
73.59
72.27
77.25
1/36
5/706
Employees
per Est.
12.61
12.80
13.06
13.63
13.84
13.71
11.82
10.98
10.62
10.87
11.28
12.33
12.93
12.85
13.64
16/36
394/705
Average Wage
($)
216,849.32
215,775.15
213,904.72
217,389.77
209,475.29
223,088.16
219,303.11
215,461.80
211,572.07
210,531.94
213,642.33
228,796.09
211,784.80
216,340.17
227,452.76
2/36
9/706
Share of the
Economy
(%)
0.80
0.77
0.77
0.80
0.79
0.84
0.72
0.62
0.57
0.58
0.62
0.70
0.68
0.70
N/A
2/36
27/706
SOURCE: WWW.IBISWORLD.COM
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Industry Jargon
IBISWorld Glossary
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