With the exception of some minor speedbumps, 2018 was a great year for most engineering and construction (E&C) companies, as shown by the expected spending growth of 5%. Now as we move deeper into 2019, what can E&C companies expect for the rest of year and beyond? FMI recently issued their annual outlook on the E&C industry, and some of the key highlights of that report for E&C leaders are summarized below:
- Growth is anticipated again, but at a lower rate than in 2018. Projected growth is anticipated to be 3%.
- Mergers and acquisitions will continue to have a strong impact after a very active 2018.
- Technology investments will continue, as tech start-up companies try to transform the E&C industry.
Although growth is anticipated in 2019, there is caution in the marketplace beyond the next 12 months due to the current economic stage that we are in now. What lessons can be learned from the last economic downturn:
- Do not wait to make any hard decisions you have been deferring
- Find your own “sweet spot” and do not just follow the herd
- Work on the new, envisioned future and set the strategy for post-recession success
- Develop a firm grasp of “incremental economics,” such as revenue, margin and overhead
- Maintain a healthy balance sheet (cash and working capital) in the context of growth plans
- Get positioned in your market (and in the heads of your clients) early
- Get more feet on the street
Your key to success is taking the lessons above, getting back to basics and focus on building the best company now. How do you do this? Learn from companies that are no longer in the industry due to the following:
- Poor strategic leadership
- Excessive ego
- Too much change
- Loss of discipline
- Inadequate capitalization
The remaining portion of the outlook touches on 2018 segment performance, regional performance, employment, construction spend, and consumers.
To see the entire 2019 outlook from FMI, please click here.
To speak with a Barnes Dennig Construction Team Member on how to best position your company for success in 2019 and beyond, contact us here, or call 513-241-8313.