North America

Things we will see in the 2nd Q of 2021:

USA, CANADA & MEXICO are forecast to see nominal GDP growth in the range of 2.4% to 2.9%:

There are indications that the COVID-19 epidemic is starting to wane, however, we are not out of the woods yet, a 3rd COVID wave is a distinct possibility in certain US / Mexican states & Canadian provinces.

At least an additional 250,000 or more extra construction workers will be needed in the 2nd half of 2021 to keep pace with the booming single family homes & apartments related construction that is really resonating across the vast majority of US states. Extremely low mortgage rates, pent up demand & a flight to the suburbs is fueling this housing expansion.

A full US economic recovery will take at least 3 to 9 months to return to pre-COVID-19 levels, the good news is that the economies of USA, CANADA & MEXICO are starting to see growth as we move into 2nd half of 2021. In the USA, all of US States are now allowing construction work to proceed. Safety & worker protection has really become an important issue on construction sites in the last year.

Oil & Gas Owners / Operating Companies are taking a second look at their 2021 CAPEX budgets, with the recent strong rise in oil prices a number of CAPEX related Petro-Chemical, Energy & Power projects could move forward in the 3rd & 4th Q of 2021.

The majority of Refinery, Power, Manufacturing Pharmaceutical, Food Production & Owner related companies are including clauses / contractual language in their construction contracts / Requests for Proposal (RFP’s) to minimize the spread of COVID-19 within their production sites/campus’s. Most of these contractual requirements will impact construction productivity, they include:

• Utilizing social distancing 2 meter / 6 foot rules on construction sites.

• Construction staff & workers are required to wear masks, in some cases gloves & goggles.

• Extensive cleaning measures / protocols required by Owners – some Owners are calling for dedicated COVID cleaning crews.

• Additional hiring of COVID mitigation/ testing site staff, requested by Owner.

• Increased field in-directs (Site Offices / Lunch – Change Areas & additional support labor).

• Smaller, spread-out work crews, dictated by Owner.

• Required cool-down breaks in the morning & afternoon due to the permanent wearing of masks, gloves & safety glasses in high-temperature locations.

Rebar has jumped 7% to 12% in last 6 months, look for a possible shortage in 2nd half of 2021.

Lumber / Plywood is in demand – prices are increasing by 12% to 22% over 2020 costs, this is due to the current US & Canadian housing boom.

The high Lumber / Plywood & Rebar material prices are expected to drop as supply catches up with demand in the 2nd Q of 2021.

Unfortunately, COVID has put a lot of small / mid-sized A/E’s, contractors, sub-contractors & vendors out of business. Cash flow problems & lack of work is the reason for this situation.

Canada has seen 900,000 confirmed COVID cases & close to 23,000 deaths due to the virus. The Canadian economy and construction sector was severely impacted by the COVID-19 virus, and low oil demand / deteriorating oil prices. However, the recent spike in oil prices is somewhat of good news for the Canadian oil patch.

The COVID-19 virus will hopefully fade away in the next 6 to 12 months, Canada is currently experiencing a housing boom, and the rest of the construction sector will remain flat for the next 3 to 9 months.

Mexico has seen over 2 million confirmed COVID cases & 200,000 related deaths due to the virus, however a recent report indicated the number of deaths is closer to 350,000.

Like its two northern neighbors, the Mexican economy and construction sector struggled with the COVID-19 pandemic. This together with low oil prices in 2020 stymied the Mexican economy and construction sector, the COVID-19 pandemic will eventually be contained, this may take at least 6 months to achieve. $60 to $75 a barrel oil prices are forecast to in place in 2021 which is beneficial to the Mexican economy & its construction sector. A sustained economic recovery will take anywhere from 6 months to 12 months to achieve.