Stocks have fallen, banks have failed, projects are being delayed and cancelled at an unprecedented rate, and bailouts have come. Most sectors of the construction industry are facing their most severe downturn in more than 25 years. All of this begs the question, how is the industry responding?
To answer this question, FMI, management consultants for the construction industry, surveyed 230 of the most influential executives in the U.S. construction industry to gauge exactly how executives of the industry’s leading firms were preparing for a rapidly changing landscape. It is clear that the world is changing, and participants in this year’s survey were asked to rate just how much the competitive environment had intensified over the last 12 months.
Briston Blair, author of the report titled, “2009 Construction Industry Strategy Survey: Strategy in the Eye of the Storm,” says, “Our findings suggest that while most companies anticipate a high degree of future uncertainty, they have not adapted the way they develop strategies. As uncertainty increases, so too should the level of preparation and depth of analysis that is used to determine a go-forward direction. Far too many contractors have yet to adapt to the changing context.”
Some of the more interesting report findings:
- Many firms do not feel adequately prepared for the
uncertainty that lies ahead.
- Firms in the middle market are anticipating the most uncertainty and
are the least prepared.
- The lack of in-depth planning is preventing some firms from developing a strategy that aligns with the shifting industry context.
The hardest hit firms usually are those stuck in the middle of the market as larger firms increase competition from the top and smaller companies become more aggressive from the bottom.
The final section of this year’s survey allowed participants to provide written commentary in response to the question, “How have the events of the last six months changed the way you think about your firm’s strategy?” The responses ranged from A to Z, but the undertones contained within varied primarily between opportunistic and concerned, proactive and reactive. Some of the more revealing comments:
- “Nobody has a clue what the future holds, so we need to be
ready for anything.”
- “We are looking farther away geographically…with joint venture firms
that are local, substantial and have experienced personnel to
- “We will also look at strategic growth through acquisition to enter
- “We’re engaged in intense visioning and strategy sessions to examine
all products and services offered, cost position and customer
- “I don’t think you do anything ‘differently’ in tough economic
times; you simply do ‘better’ what you should already be doing.”
- “I am more concerned with survival than growth.”
- “Our strategy is wait-and-see while we continue to invest in
training and management succession.”
- “Business as usual; ‘hoping’ things will get better soon.”
No one can doubt that the construction markets have been severely disrupted by the global financial crisis, but the sky has not fallen. Contractors have made money in the past during similar times of uncertainty. Successful contractors will use this time to refocus the business, examine strategic opportunities, and right-size their operations. The latest storm will leave a world of opportunities in its wake, but the next boom is unlikely to mirror the last. There are many possible futures facing the industry, and those firms preparing and adapting their strategies now will be there to win big when the market recovers.