FMI Market Forecast Takeaways
Posted on Dec. 21, 2022 / Marketing Strategy, Events / Subscribe 0
AUTHOR: Suzanne King, CPSM Contact
First, the bad news – the recession is real, and we are living it. How long will we be here? There are three possible scenarios. In the best possible scenario, there is a 15% chance that the recession will end in six to twelve months. In the worst-case scenario, there is a 25% probability that the recession will last two to three years. The most reasonably expected scenario is that the recession will last twelve to eighteen months.
In November, the Boston Chapter invited Julie Witecki, CPSM, Senior Consultant, Strategy from FMI Consulting, to give us an overview of the economy, and what we can expect to see over the next few months and beyond. She shared tips about new markets, and she gave us some good news and some bad news.
Some of the economic factors challenging the AEC industry include international conflict; unstable monetary policies; workforce challenges; the U.S. dollar’s stability; and changing regulations related to Environmental, Social, and Governance (ESG) compliance. The biggest concern is supply chain disruptions. An undercurrent to this concern is a shortage of truck drivers, and the anticipated greater shortage as older drivers retire because no “young” people are entering the workforce to replace them. Julie stated, “It is estimated that by 2026, the shortage of drivers will be in the thousands. While technological changes may be able to combat these stresses, we are not quite there.”
Residential construction spending is expected to decline in 2023 due to softening economic conditions and increasing interest rates, and office and commercial construction is sitting below the growth line due to the remote work trend. This holds true in New England, where the trends are similar to those seen across the nation. A few other areas where development has been declining are malls, sporting arenas, movie theaters, and textile mills.
But it’s not all bad news! The FMI forecast suggests that general building and heavy civil sectors will grow steadily for the next five years, especially manufacturing, which is riding a growth trend that is expected to last for many years. The Bipartisan Infrastructure Law will pad the forecast for non-building structures like roads, bridges and other infrastructure.
What worked before isn’t going to work in the future. So where should our companies shift their attention? We would be wise to focus on emerging technologies, including those that support efficient logistics chains, dependable public transit systems, and localized services. Examples include:
- Mass transit
- Food/beverage manufacturing
- E-commerce – distribution centers
- Pharmaceuticals - demand is up for R&D&M space
- Semiconductor manufacturers
- Energy – a reliable and secure power grid
Historically, the AEC industry has adapted slowly to change, especially concerning technology. This attitude must change with four disruptive trends knocking at our doors: digitization, connectivity, resilience, and sustainability. Now is an excellent time to start thinking about how the industry can get in front of the technology for our companies and the clients we work with. Food for thought:
- Investigate new offerings to help your clients to navigate to net zero
- Develop a workforce and company culture that supports the new trends in technology and sustainability
- Get behind new and emerging technologies that help your company and your client’s companies
- Find the green energy and cleantech spaces your organizations can specialize in
Thank you to Julie Witecki, CPSM from FMI for her time. To learn more about FMI click the link. To read about Julie and her career in the A/E/C industry, check out her interview in the December 9, 2022, SMPS HQ Member Spotlight.
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