The Source Civil Engineering Magazine The pandemic will influence the 2021 market for civil engineering
Editor's Note

The pandemic will influence the 2021 market for civil engineering

By Laurie A. Shuster

editor's note logo

Ignore the stock market, forget the gross domestic product, and disregard the unemployment figures (which are always off anyway because they don’t count people who have stopped looking for jobs out of sheer frustration). Engineers and contractors trying to forecast the most in-demand project types in 2021 and beyond may want to consider what has already been affected — both negatively and positively — by COVID-19. 

That is essentially the message delivered by FMI Corp., a business consulting firm based in Raleigh, North Carolina, that specializes in the architecture, engineering, and construction market, in its most recent forecast. In a video on the company’s website, managing director of research and analytics Jay Bowman points out that while most economists expect the current recession to be relatively short, with recovery beginning late next year, the construction market usually lags the overall economy by 12 to 18 months. That means the overall AEC market will continue to trend downward throughout 2021 and 2022, even if the rest of the economy is experiencing a recovery by then. And that 2022 “trough,” Bowman says, could be as steep as 15 percent below the peak numbers seen in 2018 and 2019.

Some segments of the market will start to see a recovery in 2023, FMI projects, but others won’t even begin to the climb out until 2024. And as always, certain segments will be harder hit than others. Bowman says anything that can be thought of as “vertical construction,” especially multifamily housing units, is likely to decline as much as 18 to 19 percent below the peak over the next two years, for example. That’s a huge hit.

Nonresidential construction, the bread and butter of civil engineers’ work, will be a mixed bag if FMI is right. Those segments affected most by stay-at-home orders, and the social changes they have engendered, will naturally be hit hardest and longest. Lodging? Forget about it; down a whopping 21 percent in 2021 versus 2020 and down another 16 percent in 2022 and 3 percent in 2023. Office space? No longer required. It will be down by double digits for two years and won’t rise again for four. Commercial construction? Maybe if you’re building Amazon distribution centers, but not if you’re looking at brick-and-mortar retail stores or, heaven forbid, shopping malls. Commercial construction will be down by double digits for two years and another 1 percent in 2023 before rising 7 percent in 2024.

As the country faces the distinct possibility of effective vaccines and a slow return to (a new) normal, the civil engineering profession can call upon its analytical skills, flexibility, and dedication to public service to steer it in the right direction.

Amusement and recreation? No one is going to Disneyland for a while; the sector will be down 20 percent in 2021, 16 percent in 2022, and 4 percent more in 2023. Even public safety spending will be off for three years running before a modest increase of 3 percent in 2024.

Sewage and waste disposal won’t be affected as much, experiencing drops of 1 percent next year and 7 percent in 2022 but also won’t recover as early, taking another 4 percent hit in 2023 before struggling to increase by 4 percent in 2024. And water supply construction will stay flat next year, declining by 7 percent in 2022 and 2 percent in 2023. In 2024, construction in water will rise a bit, by 3 percent. Call it a wash.

The (relatively) bright spots? Health care will only decline 5 percent next year and 3 percent the year after that before beginning to rise by similar percentages in 2023 and 2024, according to FMI. Education construction will be flat in 2022 but will rise modestly in 2023 and 2024 as the kids get back to school, to the great relief of their parents.

And if luck holds, transportation spending will rise by 2 percent in 2023 and 6 percent in 2024, after declines of 7 and 8 percent, respectively, in the two years preceding. As FMI measures it, transportation excludes highways and streets, which will actually not fare so badly either. After declining by just 2 percent in 2021, highways and streets will rise as soon as 2022, by 3 percent, and stay in the 3 to 4 percent increase range for the following two years. Hopefully, a federal transportation spending bill will provide a needed boost. 

It is always difficult to predict demand and which markets to target for long-term planning. The changes wrought by COVID-19 in 2020 have turned that difficulty into a near impossibility. But as the country faces the distinct possibility of effective vaccines and a slow return to (a new) normal, the civil engineering profession can call upon its analytical skills, flexibility, and dedication to public service to steer it in the right directions.

This article first appeared in the December 2020 issue of Civil Engineering as “The Pandemic Will Drive the Markets.”

- Advertisement -

LEAVE A REPLY

Please enter your comment!
Please enter your name here

- Advertisement -