The Global Construction Guide 2024 uses a set of exclusive 'top lists' compiled by the KHL Group editorial team in sectors such as construction, rental, cranes, access and demolition and recycling and brings them all together in one place.
What do these lists say about the state of the global construction market over the past year?
The most obvious thing they reveal is two macroeconomic trends: a surprisingly strong performance of the US construction market, compared to a weakened sector in China, which continues to grapple with a prolonged real estate crisis.
The CHIPS Act, which aims to catalyze the semiconductor industry in the U.S., has led to a glut of industrial construction projects, while the far-reaching, two-year-old, $1.2 trillion Bipartisan Infrastructure Act has spurred infrastructure projects across the U.S., even as interest rates are higher and demand for residential construction has declined.
Meanwhile, China has been grappling with a real estate crisis, framed by the collapse of the heavily indebted Evergrande Group, the fallout from which has stifled demand for construction. This comes at a time when China has scaled back its 10-year-old Belt and Road Initiative (BRI), as it begins to shift from large investments in physical infrastructure projects that benefited Chinese construction contractors and original equipment manufacturers (OEMs) to “small and beautiful” projects with low investment and high returns.
The top lists illustrate the strength of the United States and the struggle of China
The International Construction Council's ICON200 ranking of the world's 200 largest construction companies is a lagging indicator in that it ranks companies based on annual revenue. Therefore, the 2023 list is based on the companies' 2022/23 financial year, but it can still be a good indicator of the direction the industry is heading.
While five Chinese companies still dominate the top spots, led by China State Construction and Engineering Company (CSCEC) with sales of US$303.4 billion, the proportion of revenue of the top 200 companies represented by Chinese companies remained stable at 44%.
Revenue share of ICON 200 construction companies by country (Source: ICON 200/KHL Group).
Conversely, US companies increased their share of revenue from 12.5% in 2022 to 13.7% in 2023, and of the 33 US companies on the list, 21 saw their ranking increase, while three remained the same and only nine fell.
Meanwhile, the 2023 Yellow Table, which ranks the world's 50 largest original equipment manufacturers of construction equipment and is also featured in the 2024 Global Construction Guide, told a similar story.
Revenue generated by Asian companies in the Yellow Table fell from more than half of the total in 2022 (50.2%) to 44.8% in 2023. The main reason was a decline in the Chinese market. The leading Chinese original equipment manufacturers (OEMs) listed experienced a collective decrease in their revenue share.
The IRN100 list of the world's top rental companies also highlighted a disparity in growth between North America and most of the rest of the world.
The data compiled from the table, which ranks rental companies by annual revenue, showed average growth of 14.9% for companies in the US and Canada, compared to 4% elsewhere, with the exception of China. The top three companies (United Rentals, Sunbelt, and Herc) operate entirely or primarily in that region.
Chinese companies continued to expand at a strong pace, but the IRN100 analysis also noted a cooling in the region.
The Chinese market is still huge… but it's no longer the engine of growth it once was
China will continue to have a huge influence on the global construction sector, according to the analysis included in the Global Construction Guide
By 2037, it is projected to become the world's largest construction market, with a 31% share, compared to 13% for the US and 7% for India. But the pace of growth in construction jobs in China is likely to slow over the next 15 years as its population begins to decline, according to economists at Oxford Economics.
Growth 2022-2037 in global construction regions (work completed in 2022 and prices in dollars). [Source: Oxford Economics/Haver Analytics]
Significant growth is still expected. The government plans to build 200,000 kilometers of railways, 460,000 kilometers of roads, and 25,000 high-level waterways by 2035, according to Oxford Economics' Global Construction Futures report. But other regions are likely to outpace it.
Economists also predict that “emerging Asia” will see a compound annual growth rate (CAGR) of 3.3% between 2022 and 2037 (based on work done at 2022 prices), which is higher than any other region.
While “emerging Asia” includes China, it also incorporates India, Indonesia, Malaysia, the Philippines, Thailand, and Vietnam.
And it is in India where the greatest growth in construction could occur over the next 15 years, according to Oxford Economics. They predict that growth there will outpace that in the United States, as the world's most populous country becomes a nearly trillion-dollar global construction powerhouse.
Source: https://www.construccionlatinoamericana.com/
