Construction During a Pandemic
COVID-19 has brought a rapid shift in the economy on a global scale and the construction sector is not insulated from this impact. This online tracker helps construction companies and building material suppliers identify which states are classifying construction as essential.1
Home-builder Sentiment Plunges
Home-builders' sentiment suffered the largest drop in the history of the index falling 42 points to a reading of 30 for April, the lowest reading since June 2012. The index considers any reading above 50 to be a positive indicator, this is the first negative reading in the index since June 2014.2
Coronavirus Impacting Construction Industry
The Coronavirus pandemic is disrupting businesses across the world. The U.S. currently imports between 30 - 80% of building products from China. A slowdown in the supply chain in China is expected to cause a price increase across many of the commodities including steel, copper, and aluminum. These price increases haven’t been released yet but contractors are expecting to see them as the virus progresses.3
Expect Delays in Projects
Anxiety is mounting regarding the pandemic and, as a result, clients are slowing down or delaying large scale projects. This has been seen in more conservative underwriting of construction financing for projects as well.4
Imports Down 23% in February at Port of Los Angeles
Expected shipments to arrive at Port of Los Angeles include shipments of Chinese copper and furniture from the Philippines among other goods. The import slow down isn’t limited to Port of Los Angeles as imports from Italy and Germany are also being delayed. The slow down won’t create immediate shortages but will be felt when inventory runs out in the next 3 months.5
Concrete Recycling and New Construction Material
Scientists found a new procedure for recycling concrete that can reduce construction costs and reduce carbon footprint. The new procedure adds wood to the recycled material to create a new material with better bending qualities compared to the original concrete. This new procedure can address the concerns around cement production, which represents a significant portion of the CO2 created by humans. Companies will be able to create better concrete with a lesser impact on the environment.6
Quikrete and U.S. Department of Energy Cooperation
U.S. Department of Energy’s Oak Ridge National Laboratory and Quikrete started a cooperative effort to design a new type of concrete for large-scale structures through the use of 3D printing technology. The new building material will be a pumpable material that can set quickly. Furthermore, researchers expect the new material to meet durability, curing, and other performance characteristics required for commercial application. Both parties expect this new material to become instrumental in printable construction and have a significant industry impact.7
Integration of 5G and Shaping of the Construction Industry
New technologies in the construction industry are going to experience a change with the incoming 5G technology. An upgrade in the network speed and reliability will allow machines and robots in the construction industry to perform better by enabling real-time feedback. Autonomous robots, masons, welders, and cranes can leverage data from their sensors in real-time and trigger specific actions. 5G can reduce latency and increase reliability and security for these systems.8
Largest Transactions Closed
- William Lyon Homes
- Taylor Morrison Home Corporation
- Continental Building Products, Inc.
- CertainTeed Gypsum & Ceiling USA, Inc.
- Kosmos Cement Plant & Related Assets of Kosmos Cement Company
- Eagle Materials, Inc.
- Certain Power & Energy Business of SPX Flow
- Apollo Global Management, Inc.
- Cherry Industries, Inc.
- Arcosa, Inc.
- Coram Materials, Inc.
- U.S. Concrete, Inc.
- NewSouth Window Solutions, LLC
- PGT Innovations, Inc.
- All Assets of Just Manufacturing Company, Inc.
- Zurn Industries, LLC
- Substantially All Assets & Operations of Thrive Residential
- Toll Brothers, Inc.
- Garrett Walker Homes, LLC
- Landsea Homes of Arizona LLC
Source S&P Capital IQ as of 4/13/2020 and PCE Proprietary Data
This report represents transaction activity as mergers & acquisitions, consolidations, restructurings and spin-offs. Targets are defined as U.S. Based companies with either foreign or U.S. based buyers. Transaction information provided is based on closed dates only.
EBIT - Earnings Before Interest and Taxes