43rd MCN Annual Contractor Survey
by Brooke Smith | 25 March 2024 7:00 am
Optimism is key in every industry—no more so than in construction. After all, the industry faces many challenging (and fluctuating) factors, including economic conditions, lack of skilled labor, and availability of material. If contractors focused too intently on those factors, nothing might ever get built. They must continually look for that silver lining.
This year, respondents to our 43rd annual Contractor Survey may have found that lining. There were some healthy numbers for 2023, and, in looking at this year, contractors’ forecasts are positive.
Overall, total metal sales volume for all completed and new construction projects was healthy. Last year, 30.8 percent of contractors sold $15 million or more in completed and new construction projects. While 15.4 percent sold under $1 million, there were double-digit percentages for those who sold $1 million to $3 million (19.2 percent), $7 million to $11 million (14.1 percent), and $3 million to $7 million and $11 million to $15 million (both 10.3 percent). These double-digits may correlate with the size of the actual business, and whether it is a stand-alone or subsidiary.
For total metal project sales volume, most contractors (29.7 percent) sold $10 million or more, and 29.7 percent sold under $1 million. Rounding out completed metal project sales, 16.2 percent of respondents sold $1 million to $3 million; 8.1 percent of respondents sold $3 million to $5 million and $5 million to $7 million; 5.4 percent brought their businesses $9 million to $10 million; and 2.7 percent sold $7 million to $9 million.
Who and where
While contractor companies are spread across the U.S., the South is typically well represented in our survey. Just over one-third of this year’s respondents are in the South region, with 34.7 percent reporting. This is down slightly from last year’s Southern participants.
The Midwest, also steadily represented, has 27.9 percent of businesses reporting this year, though that is also a small drop reported in last year’s survey. Almost equally represented this year are those companies located in the East region, at 16.5 percent, followed closely behind by those in the West, at 15.4 percent. This year there were slightly more survey participants in the East, whereas Western participants decreased slightly. There are also a handful of company respondents (5.8 percent) reporting that are not based in the U.S.
The makeup of types of contractors is generally similar to what was reported in last year’s survey. The majority (32.6 percent) of respondents identified as General Contractors, with most based in the West (42.9 percent). The next largest group, though at one-third of the General Contractor group, is Metal Building Contractors, at 11.2 percent national. Here, the South was well represented, with 15.6 percent. A smaller percentage of respondents this year (as this is the usual case in our survey) focus more on specialty work, and this is reflective in their titles: Metal Erectors, 6.7 percent; Roofing Contractors, 3.4 percent; and Metal Roofing Contractors and Metal Framing Contractors, both 1.1 percent. These titles are also represented regionally with single-digit percentages. The lower percentages for specialist participants are not surprising; in last year’s survey, roofers and metal framers were also represented with single-digit percentages.
Interestingly, the Other category experienced a more than double increase this year, reaching 43.8 percent. The majority (89.4 percent) of companies are stand-alone businesses; subsidiaries comprise just 10.6 percent of survey respondents this year. Regionally, all companies reporting from the West (100 percent) are stand-alone, followed by 90.9 percent from the South, 88 percent from the Midwest, and 83.3 percent from the East.
Sectors
While contractors were involved throughout different sectors in 2023, the most common metal building system job among our respondents tends to be in the commercial space. Commercial was the top sector once again for 2023, at 82.5 percent, with a small decline from 2022 (86.5 percent). By region, the West was the highest at 88.9 percent; followed by the Midwest, at 80 percent; the East, at 75 percent; and the South, at 60 percent. Other sectors (with slight declines from their numbers in 2022) are Retail, at 23.8 percent; and Mini-storage and Institutional, both at 19 percent.
All six of the remaining sectors (out of the 10 total included in the survey) show increases in 2023. Industrial work was the second most common sector for contractors in 2023, rising to 60.3 percent, pointedly higher than reported in 2022 (53.8 percent). By sector, the South has a higher percentage, at 46.7 percent; followed by the West, at 44.4 percent; and the Midwest at 30 percent. There were no contractors involved in industrial projects in the East. The Agricultural and Government sectors, both at 30.2 percent, showed healthy increases than reported in 2022. Residential, at 23.8 percent; Transportation, at 26.6 percent; and Cold-storage, at 14.3 percent all showed pointed increases.
According to the Dodge Construction Network (DCN) Outlook 2024 report, 2023 showed a slowing of residential and nonresidential construction starts. Clearly for our respondents, the slowing may not have been an issue, as they reported more completed residential projects in 2023, than in 2022. However, the decreasing nonresidential projects reported by our respondents seems to hold true with DCN’s report.
However, for 2024, according to the report, DCN experts expect residential and nonresidential construction to start improving—barring raised interest rates and/or a recession. In residential construction, experts anticipate a 9 percent increase in single-family construction, reaching $244 billion, with the number of units rising to 845,000. Similarly, multifamily construction starts are expected to increase by 14 percent, reaching $161 billion, with the number of units growing to 740,000.
Buildings, roofing, and light gauge
For metal building projects, it seems mid-size was the theme last year, as was the case in 2022. In 2023, more than half (53.2 percent) of contractors worked on projects in the 929 to 1,858 m2 (10,000 to 20,000 sf) range; this was followed closely by 51.6 percent working on 1,858 to 4,645 m2 (20,000 to 50,000 sf) metal building projects. However, larger size metal projects of 7,432 m2 (80,000 sf) or more did get a boost this year, at 38.7 percent. This was a slight increase from 33.3 percent in 2022.
Regionally, the West led the way in both the smallest (less than 10,000 sf) metal building projects (70 percent) and the largest (more than 80,000 sf) (60 percent).
For metal roofing projects, the West led again with 33.3 percent completed in 2023. Southern companies were next at 14.3 percent and then 7.1 percent for those in the Midwest. In the East, survey respondents did not report any completed metal roofing projects.
In terms of completed metal wall panel projects, the Midwest had 10 percent completion, while the South had over half of that, with 5.9 percent completion. Neither the West nor the East reported any completed metal panel projects in 2023.
In 2023, contractors also completed a number of light-gauge interior and light-gauge exterior framing projects. Interior and exterior projects were comparable, with only 2.8 percent and 2.6 percent, respectively, of contractors completing 50 or more projects in 2023.
Most of the interior light-gauge projects fell in the range of two to nine for the year, with an average of 18 percent of contractors. Half (50 percent) of contractors did not complete any interior light-gauge framing projects.
This is similar for the exterior light-gauge projects, with an average of 14.5 percent of contractors completing two to nine projects for the year. Similarly, almost one-third (63.2 percent) of contractors did not complete any exterior light-gauge projects.
Forecasts
According to the Outlook 2024 report, construction starts are expected to gain 7 percent to $1.2 trillion—a major increase from the slow growth (1 percent) in 2023. This seems to reflect positively in our contractors’ prognostications for metal projects.
This year, 13.2 percent of survey respondents project they will complete 50 or more metal projects, with 11.3 percent looking to complete 25 to 49 projects. However, most contractors suspect they will complete anywhere from two to 24 metal projects. Specifically, 20.8 percent aim to complete five to nine projects, 18.9 percent are targeting 15 to 24 projects, and 17 percent are looking at completing two to four metal projects. Just over one-tenth (11.3 percent) do not project completing any metal projects in 2024.
Similarly, the outlook for completing metal roofing projects is positive, with three-quarters, 75.8 percent, projecting they will take on at least one metal roofing project this year. The majority, 29.3 percent, suspect they will complete anywhere from two to four metal roofing projects, but 15.5 percent expect to complete 50 or more.
As for metal wall panel projects, respondents do not expect to complete as many compared to metal buildings and roofing projects. Many respondents (31.1 percent) say they will complete two to four metal wall panel projects; only 4.4 percent say they will complete 50 or more. Contractors expect to produce 15 to 24 or 25 to 49 metal wall panel projects (both 8.9 percent), while more than one-quarter (28.9 percent) are forecasting they will not produce any metal wall panel projects.
Many, a few, or no metal projects—that is what is in store for 2024. We shall see in our 44th survey if this year truly is a silver lining—or simply just a sliver.
Source URL: https://www.metalconstructionnews.com/articles/43rd-mcn-annual-contractor-survey/