Opinion-Banner

US Industrial Construction Revenue Looks Cautiously Optimistic

December 30th, 2013 | by Morris Beschloss | Comments

In analyzing the 2014 industrial construction take-off quarter, we consulted industrial components expert, Steve Letko, regarding the geographical regions’ growth and the intensity of the product components comprising anticipated overall end-use growth. Although indicating a softening demand, particularly noted in the subdued commercial and public sector construction markets, he predicted that ample availability of raw materials required for production would not impact the overall materiel cost or price factors in the early part of the year.

Letko’s overall nationwide analysis revealed some growth in the U.S. as a whole during 2014. But his anticipation noted sub-par peak levels reached after the end of the “great recession.” While residential construction growth, predominantly single family housing at a roaring 26%, and multi-family building at 11%, will signify a major comeback, much of it will be dedicated to long-term leasing and monthly rental contracts.

Non-residential construction (commercial, healthcare, light industrial, etc) will also be a strong additive, with an 8% growth factor. Office building construction will add 15%, while hotels and motels will supplement 16% additions. General commercial activities will be chiming in with another 15%, while institutional development of all types will add a modest 2%.

Non-building construction (highways, bridges, dams, electric utilities and public works, etc.) will be down 9% from 2013; while electric utilities, caught in the coal-to-natural gas bind will likely drop off materially with a thumping 33% from last year’s level. However, this lull may signal a lofty rebound in 2015, as major new projects come off the drawing board. This not only includes a growing number of natural gas terminals to ship America’s abundant supply the world over, but a strong concentration of natural gasfield projects in the mid-Atlantic and Northeastern U.S. These two areas alone have more than $9.6 billion in planned natural gas-fired project starts. In total, close to $30 billion is being planned for 250 natural gas fired projects (capital and maintenance by the end of 2014.)

Region-wise, the South Atlantic projects the largest pickup activity over 2013 with a total of 16% over 2013. In descending order, the Far West follows at 10%, Midwest at 7%, South Central at 8%, and the Northeast at 4%.

Also looking like a sure bet are additional pipeline construction activities to interlock the expanding shale development with America’s proliferated refinery matrix. These forecasts are based on official data by relevant agencies for 2014 scheduled construction starts. However, these targets are cautiously optimistic, barring the turbulence of unexpected and restrictive government policies, and the outcome of budget, tax, and debt ceiling negotiations.

For future easy access to my blogs, please use the link below, and bookmark it to your desktop. The old link you may be using is still available. However, an alternate link is: http://mydesert.com/beschloss

Share your thoughts

Copyright © 2014 archive.desertsun.com. All rights reserved. Users of this site agree to the Terms of Service, Privacy Notice, and Ad Choices