Construction will be one of the global engines of recovery: Planning, forecasts and projects in the USA, UK, China, Barein ( I )

Burgos, March 18, 2021.- Construction companies in the vast majority of countries are going to become the great collaborators of change, digital transformation, and economic recovery. This might be a wish, but it is a reality based on the construction reports read in the USA, UK, China and Barein. Four leading economies in their respective continents. Below, I summarize the main findings in each of these countries.

By the way, earlier the underlined this diagnosis that I read in DailyComercialNews:

“Today, as vaccination is gaining speed, the construction industry is prepared to play catch up. At the same time, many countries have introduced massive infrastructure development plans to boost their economic recoveries. Also, historically low cost of financing is providing another tailwind for the industry. The construction and mining machinery industry has been a reliable indicator of the trends in construction. On Friday, Jan. 29, one of the major players, Caterpillar, released its fourth-quarter and full-year financial results for 2020. They indicated a major drop in sales and decreased profitability relative to the previous year. “Sales and revenues for the fourth quarter of 2020 were $11.2 billion, a 15 per cent decrease compared with $13.1 billion in the fourth quarter of 2019. Fourth-quarter 2020 profit per share was $1.42 compared with $1.97 per share in the fourth quarter of 2019.” Full-year 2020 revenues decreased by 22 per cent and the company’s annual 2020 profit was $5.46 per share, about half compared with $10.74 per share in 2019. Despite the weakness, the reported financials exceeded market expectations and the company’s management reiterated potential recovery and reacceleration of sales this year. These hopes are based on several promising developments, including growing global infrastructure construction activity and rising sales of heavy machinery in China and the United States, partly due to the strong demand for residential structures. Additionally, climbing commodity prices are likely to result in the recovery of oil-exploration and the metals business”.

USA: The growth of the construction sector will accompany the recovery of the country

The American construction magazine agrees on the diagnoses and the following expert opinions on fiscal year 2021:

“My expectation is that the U.S. economy will shrink between 4% and 5% in 2020,” said Anirban Basu, chief economist at the Associated Builders and Contractors during a year-end webinar, where he also made the good-bad prognostication quoted above. “But we’re going to come back hard in 2021.”

There are reasons for hope, such as a second coronavirus vaccine being authorized for emergency use and shipped in recent weeks and the $900 billion relief package recently signed by President Trump. But the drivers of optimism among those who track construction are also more specific to the space, while encompassing fundamental shifts in markets and processes that will lead to more broad-based development activity in 2021.

Just listen to Tom Stringer, managing director for site selection and business incentives at professional services firm BDO, whose job is to find suitable development sites for corporate clients who want to build new facilities and offices.

“Site selection tends to be a leading indicator in the economy that businesses are starting to think about capital investments, and our phones have been ringing,” Stringer said. “So if your readers are the folks on the contracting side, well, they’re about to get busy, too.”

Stringer isn’t alone. According to a post-election survey of engineering and construction executives conducted by Deloitte, 68% of respondents characterized the business outlook for the industry as somewhat or very positive.

“We do see pent-up demand sitting out there as we end out 2020 and come into 2021,” said Michelle Meisels, Deloitte’s engineering and construction practice leader.  

That widespread optimism among construction executives is grounded in the reality of several factors – some positive, some less so – that are poised to shape construction in 2021. Here are six of the top factors that will influence the industry in the new year:

Subs on the skids

The coming months and beyond could be particularly hard on subcontractors, and the contractors who will need them once projects pick up again.

“The market is just getting much more competitive for subcontractors, and therefore, sadly, some will go out of business, especially the smaller guys,” Meisels said. “General contractors may need to self-perform a lot of work they would normally sub out, and build those capabilities in house.” That’s the road Michael Bordes, president of New York City general contractor AA Jedson Company, is already on.

He said during the pandemic, he’s had to pivot from the restaurants and gyms he built previously to focus on affordable housing projects that were still considered essential. But he’s also flipping the script and limiting his risk from subs by handling more work in house.

“We’re self-performing most of the construction tasks ourselves because the subcontractors that are out there are having a very hard time,” said Bordes, noting that affording insurance is one issue subs are struggling with. “The people we’re dealing with may not be transparent about saying we’re having trouble with assurances or we’re short on labor. If you keep it on your payroll, you at least have 95% control.”

Staying safe

Meanwhile, Bordes said he’s focused on keeping his workers safe and healthy by combating complacency and continually reinforcing mitigation strategies, which has become more challenging as the pandemic has worn on. And while he hopes his workers will sign up to get the vaccine, he says he’s not planning to force them to do so if they have reservations about taking it. 

“We know masks work. We know sanitizing on a regular basis, washing your hands and not touching your face works to not get this disease,” Bordes said. “But while we would suggest to employees that it’s important to get the vaccine, we don’t feel we can force them. Some are still cautious about what the side effects might be in the future.”

While the Equal Opportunity Employment Commission, as well as a panel of construction lawyers, recently determined that employers could require workers to be vaccinated with certain exceptions, the implications of forcing workers who object to get inoculated over potential safety concerns is sure to be a challenge for contractors in 2021. 

Hiring for the surge to come

With subs being squeezed, contractors will also surely be challenged to hire enough workers, even in house, when the pent-up demand of mothballed projects are put back into the marketplace once the pandemic is brought under control. At the same time, observers say companies aren’t doing so yet, since many new projects still aren’t coming to market, given the explosion of coronavirus cases going into 2021.

“The story there is that projects are still getting pushed to the right, so companies are not hiring unless they have a job to put someone on,” said Patrick Jones, who leads the architecture, engineering and construction division at Raleigh, North Carolina-based recruiting firm Orion Talent. “They’re not just out there building bench strength.”

He says while experienced superintendents and estimators are still in high demand, companies don’t necessarily want to hire individuals they would have to train and invest in while jobs are still scarce. “We see that hiring for what I would call the entry level roles has slowed,” Jones said.

At the same time, nonresidential construction has only regained 58% of the jobsit lost since the beginning of the pandemicaccording to Ken Simonson, chief economist for the Associated General Contractors of America. In November, he noted, the industry’s unemployment rate was 7.3%, not seasonally adjusted, with 732,000 former construction workers idled. 

On its surface, that may indicate contractors will have an easier time hiring coming out of the pandemic. But that’s still not likely to be the case, according to Basu.

During his economic forecast in December, Basu asked his audience of more than 1,000 participants how many intended to increase staffing in the coming year, with more than half responding affirmatively. That’s in line with the ABC’s Construction Confidence Index from November, which indicated a majority of firms intended to increase staffing in the next six months.

Given the demand for projects, along with many firms trying to hire workers whenever jobs are finally released in 2021, contractors may experience labor challenges all over again.

“I would predict that many of you will continue to suffer difficulty finding truly motivated and skilled workers,” Basu told his contractor audience. “One thing that has happened in past recessions is that many construction workers who lost their jobs left the construction industry altogether.”

Infrastructure on the agenda

On the bright side, there should be some increased infrastructure and building projects on the horizon.

This is especially true with President-elect Joe Biden pushing his Build Back Better initiative, which is envisioned as a broad spending program that could benefit contractors on multiple fronts.

“He’s looking for a multitrillion-dollar infrastructure bill that includes a broad definition of infrastructure, whether it’s surface transportation, aviation, waterfront, Army Corps, civil works, flood control mitigation projects, clean drinking water, renewable energy projects, K-12 public school construction or broadband,” said Jimmy Christianson, vice president of government relations at AGC. “There’s a lot in there.” Meisels also sees opportunity for contractors under that kind of program in 2021.

“Infrastructure and public utility projects could possibly see a sharp rebound,” Meisels said. “If the administration comes through and directs funds toward that, you’d see projects that are driven by this government spending.”

Renewed focus on the environment

Data center construction is one of two top-growth industries for Jones, the construction recruiter, to find specialty contractors. The other? Utility-scale solar.

“Big players in utility-scale solar have been on a growth pattern, and are really kind of hitting their stride in this next year,” Jones said.  “Obviously, the new administration would be beneficial to that as well.”

For example, Fort Lauderdale, Florida-based Moss Construction highlights several of the utility-scale solar installations it has worked on in recent years in its portfolio, and promotes on its website that it is “helping our nation move towards a cleaner energy future.”

That growth has come as renewable energy is becoming cheaper than any new electricity capacity based on fossil fuels, according to sister publication Utility Dive. 

But that opportunity for contractors also illustrates the widening awareness of a broader range of companies focusing on the environment.

For example, contractor giants AECOM and Fluor said on recent conference calls they were experiencing increased interest in their environmental services practices from clients, while Jacobs announced it achieved its net zero carbon goal for its operations and business travel in 2020, with aspirations to be carbon negative by 2030. Balfour Beatty and Lendlease also recently announced carbon-cutting initiatives

“The construction industry is under tremendous pressure to improve their energy use,” said Meisels. “But I also think that construction companies that build capabilities to support green building standards and sustainable efforts by their clients are going to be positioned to thrive. You can’t not address this if you want to be a leader in this space.”

Big news for UK construction companies

Chancellor Rishi Sunak confirmed the furlough scheme will be extended until the end of September with no changes to the terms. Employees will continue to receive 80% of their salary for hours not worked until the scheme ends. Employers will be asked to contribute 10% of this amount from July and 20% from August. Sunak said the furlough extension was to “accommodate even the most cautious view about the time it might take to exit the restrictions”. 

The chancellor also confirmed that the self-employed support scheme (SEISS) would continue, with a fourth grant up to the end of April and a fifth grant available from May. Self-employed people whose turnover has fallen by 30% will receive the full 80% SEISS grant, but self-employed people whose turnover has fallen by less than 30% will receive a 30% grant. The eligibility for the grant has also been increased, with up to an extra 600,000 people able to apply. This is because the government is now allowing workers to submit their 2019-2020 and 2020-2021 self-assessment tax returns as evidence of their earnings.

Stamp duty holiday extended

Sunak confirmed that the stamp duty holiday on house purchases under £500,000 will continue until the 30 June in England and Ireland. It had been due to end at 31 March. This means that nearly nine out of 10 people buying a new home currently pay no tamp duty at all. The Scottish and Welsh governments have received additional funding to provide similar support .

The chancellor said that in order “to smooth the transition back to normal” the nil-rate band will be £250,000 until the end of September, with the usual level of £125,000 returning on 1 October. Sunak also confirmed a new mortgage guarantee scheme, whereby a number of the UK’s largest lenders will be offering 95% mortgages from next month.

UK Infrastructure Bank

Sunak confirmed more details of the UK Infrastructure Bank – the country’s post-Brexit answer to the European Investment Bank. Coming into operation this spring the bank will have £12bn of equity and debt capital to finance local authority and private sector infrastructure projects across the UK. It will also be able to issue up to £10bn of guarantees. The hope is the Leeds-based institution will support at least £40bn of both private and public sector infrastructure projects across the UK. It is envisaged the bank will cost the exchequer £745m in 2021-22, with this increasing every year to 2025-26 when the cost is expected to be £1.79bn.

The new institution will offer a range of financing tools including debt, hybrid products, equity and guarantees to support private infrastructure projects and, from the summer, will offer loans to local authorities at a rate of gilts plus 60 basis points for strategic infrastructure projects. Sunak said the bank will be a driving force in the “green building revolution”, with budget documents confirming it will also establish an advisory function to help with the development and delivery of projects. 

Its primary focus will be on the economic infrastructure sectors covered in the National Infrastructure Strategy, including clean energy, transport, digital, water and waste. In addition, it will be able to lend to university projects that generate a return to support regional and local growth. The bank will also be able to play a role in supporting and developing early-stage technologies. The government will publish a set of investment principles for the bank later in the spring to further help it what projects should be in scope. The bank will make independent investment decisions and will need to develop assessment criteria to decide which investments it will take forward in line with its objectives. This will include environmental impacts. In due course the bank will publish a document to set this out.

Levelling up

The government confirmed details of three new investment programmes targeted at supporting its levelling up agenda. These are the UK Community Renewal Fund, the Levelling Up Fund and the Community Ownership Fund. As confirmed in November’s spending review, the UK government has committed an initial £4bn for the Levelling Up Fund for England over the next four years (up to 2024-25) and set aside at least £800m for Scotland, Wales and Northern Ireland. 

In England, Scotland and Wales, Levelling Up Fund cash will be delivered through local authorities. The Scottish and Welsh Territorial Offices will be consulted in the assessment of relevant bids. The fund will focus investment in projects that require up to £20m of funding. However, there is also scope for investing in larger high value transport projects. Bids above £20m and below £50m will be accepted for transport projects only. Local authorities can submit one bid for every MP whose constituency lies wholly within their boundary. Projects should also be aligned to and support net zero goals: for instance, be based on low or zero carbon best practice; adopt and support innovative clean tech and/or support the growth of green skills and sustainable supply chains. Part of the criteria for assesment will be based on an areas “level of need”, with the government also having published a list prioritising different areas.

The £220m UK Community Renewal Fund aims to support pilot programmes and new approaches that invest in skills, community and place, local business, and supporting people into employment.

The £150m Community Ownership Fund is intended to help ensure that communities across England, Scotland, Wales and Northern Ireland can support and continue benefiting from the local facilities, community assets and amenities.

The government also confirmed more than £1bn from the Towns Fund for a further 45 Town Deals across England and that it was accelerating investment in three City and Growth Deals in both Scotland and Wales. The deals are for Ayrshire, Argyll and Bute, and Falkirk, and Swansea Bay, North-Wales and Mid-Wales.


The government will has confirmed the location of eight new freeports in England, areas where businesses will benefit from more generous tax relief, simplified customs procedures and wider government support, bringing investment, trade and jobs which will regenerate these regions. They are: East Midlands Airport, Freeport East (Felixstowe and Harwich), Thames (Including Port of Tilbury and London Gateway Port), Liverpool City Region, Teeside, Solent, Plymouth & Devon and Teeside. Discussions are ongoing between the UK government and the devolved administrations to ensure the delivery of freeports in Scotland, Wales and Northern Ireland.

Policy in these areas that will support the construction sector includes an enhanced 10% rate of structures and buildings allowance for constructing or renovating non-residential structures and buildings for structures or buildings brought into use on or before 30 September 2026. There will also be a capital allowance of 100% for companies investing in plant and machinery for use in freeport tax sites, which will be available for the same five-year period. There will also be full relief from Stamp Duty Land Tax on land or property purchased and used for a qualifying commercial purpose. There will also be full business rates relief in freeport tax sites in England, once designated. Relief will be available to all new businesses, and certain existing businesses where they expand, until 30 September 2026. Relief will apply for five years from the point at which each beneficiary first receives relief.

R&D support

From 1 April 2021 until 31 March 2023, companies investing in qualifying new plant and machinery assets will benefit from a 130% first-year capital allowance. This upfront super-deduction will allow companies to cut their tax bill by up to 25p for every £1 they invest. Investing companies will also benefit from a 50% first-year allowance for qualifying special rate (including long life) assets.

The government has also confirmed that it will commit £375m to introduce Future Fund: Breakthrough, a new direct co-investment product to support the scale up of the most innovative, R&D-intensive businesses. The British Business Bank will take equity in funding rounds of over £20m led by private investors to ensure these companies can access the capital they need. The government has said it will carry out a review of R&D tax reliefs, with a consultation published alongside the budget. This review will consider all elements of the two R&D tax relief schemes.

The Treasury has also announced support for the development of new solutions to cut carbon emissions and accelerate low-carbon energy innovations. These include the launch of a £20m programme to support the development of floating offshore wind technology across the UK and a new £68m UK-wide competition to implement several first-of-a-kind energy storage prototypes or technology demonstrators.

MMC taskforce

A taskforce designed to stimulate housebuilding using modern methods of construction and backed by £10m of government funding was also announced by Sunak today. The new taskforce will be established by the housing ministry, with £10m of “seed funding”, designed to “accelerate the delivery of MMC homes in the UK”. Budget documents said the body will “consist of world-leading experts from across government and industry” and be designed to “fast-track” the adoption of modern methods of construction. The new unit will be based in the MHCLG’s new office in Wolverhampton and will work closely with local authorities and metro mayors, including the West Midlands Combined Authority and the Liverpool City Region.


The government confirmed that it will extend and increase the payments made to employers in England who hire new apprentices. Employers who hire a new apprentice between 1 April 2021 and 30 September 2021 will receive £3,000 per new hire, compared with £1,500 per new apprentice hire (or £2,000 for those aged 24 and under) under the previous scheme. This is in addition to the existing £1,000 payment the government provides for all new 16-18 year-old apprentices and those aged under 25 with an Education, Health and Care Plan, where that applies. The government also announced the introduction of a £7m fund from July 2021 to help employers in England set up and expand portable apprenticeships. This will enable people who need to work across multiple projects with different employers.

At the other end of the spectrum, and of equal significance to the sector, the government said it had plans to make several changes to its highly skilled migration policy. It said it would modernise the immigration sponsorship system to make it easier to use and that the government would publish a delivery roadmap in the summer. The budget papers also said the government would also introduce, by March 2022, an elite points-based visa. 

Support for SMEs

A new Help to Grow scheme, which will help thousands of SMEs get “world class” management training according to Sunak, has also been confirmed. He said that UK business schools would offer a new “executive development” programme, with the government paying 90% of the cost. Developed in partnership with industry, the programme will combine a national curriculum delivered through business schools with practical case studies and mentoring from experienced business professionals. The programmes will run for 12 weeks.

Importantly for construction, where a majority of the supply chain is made up of SMEs, there will also be support for small businesses looking to develop digital skills with free training and a 50% discount on new “productivity enhancing software” worth up to £5,000 each. This scheme will be launched in the autumn.


The chancellor also confirmed that corporation tax paid on profits increased to 25% in April 2023, saying it was “fair and necessary” to ask businesses to contribute to the economic recovery. While this figure was higher than expected, with an increase from the current 19% to 23% having been trailed, Sunak said the UK would still have the lowest corporation tax rate in the G7 after the change. The chancellor added that only 10% of companies would have to pay the full 25% on profits, with the tax targeted towards larger, more profitable firms.

Read the second installment, next March 24.

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