Industry Outlook 2018: Construction

Respondents in the construction industry come primarily from general contractor and specialty contractor businesses. Locations are evenly spread between Tucson and Phoenix. Over the last three years, about 58% of CFOs on average have indicated plans to raise prices each year, with 57% reporting plans to do so in 2018. In fact, expectations for significant revenue increases rose from just 12.5% of companies in 2017 to 35.7% for 2018. Optimism in this industry has moved from caution to confidence. CFOs indicate that recruitment, talent development, and getting new business in the door are their primary concerns to support growth. Over the last three years, CFOs have noted a major transition of ownership, requiring a new generation of leaders. While 69% of respondents cited concerns about owner retirement and transition in 2017, 43% noted it as a concern for 2018. This indicates that companies are taking the transition more seriously and putting strategies in place — including internal leader development but also mergers and acquisitions.

Concern over border security/immigration policy has finally hit a nerve, with 50% citing a "somewhat" or "large" expected impact on business.

In addition to maintaining internal controls and providing proactive data to owners, CFOs note ongoing investment in cybersecurity initiatives, including software upgrades and hiring outside consultants. Health insurance is still the biggest benefit offered by construction companies, and 50% pass costs on to employees as their method of reducing costs. In turn, they have increased the flexibility of their schedules and invested in apprenticeship programs while maintaining competitive compensation. Overall, optimism is up in this industry if they can maintain staffing and grow margins over the challenges of labor, regulatory and procurement costs. Loosening of access to credit in the banking industry was suggested, but most companies cite healthy reserves and strong banking relationships.