The construction industry in the United States is expected to grow by 5.6% to reach USD 1,271.65 billion in 2024. The growth momentum is expected to continue over the forecast period, recording a CAGR of 4.7% during 2024-2028. The construction output in the U.S. is expected to reach USD 1,530.39 billion by 2028, according to a new report from ResearchAndMarkets.com.
The United States government has announced several policy measures that aim to support infrastructure development. This, coupled with the government’s effort to bring manufacturing back to its shores, will provide growth support to the construction market over the medium term. While the long-term outlook of the sector remains robust, soaring construction costs can dampen the short-term growth prospects of the United States construction market.
Some South Korean firms have suspended their construction projects across the United States. Samsung and LG are among the leading South Korean firms that are facing challenges due to rising material prices. However, the industry is projected to receive growth support from the construction activities of multi-billion-dollar data center projects over the medium term.
US government’s infrastructure development push to support market growth in 2024
Brightline, the privately-owned train company, announced that the firm would begin construction on the $12 billion high-speed rail project in April 2024. The project, notably, will connect Las Vegas and Southern California. The firm received a grant of $3 billion from the Department of Transportation. The project, dubbed Brightline West, is expected to be operational as early 2028, which is before the scheduled Summer Olympics in Los Angeles. Several other high-speed rail projects, including those in California and Texas, are under construction as of April 2024.
The Federal Aviation Administration (FAA), in March 2024, also announced US$110 million in Bipartisan Infrastructure Law. The investment will fund more than 70 airports across the United States for projects that are aimed at boosting safety and expanding capacity. Of the $110 million investment, $43 million has been allocated to Charlotte Douglas International Airport in North Carolina. The funding will be used for the construction of a 6,400-foot end-around taxiway at the Runway 18C. These projects, and the infrastructure development push from the Biden government, are expected to keep supporting market growth in 2024.
Samsung and LG suspend construction projects due to soaring costs in the United States
The surge in construction costs, coupled with the lingering subsidy uncertainties, has forced firms like Samsung and LG to suspend their construction projects in the United States. Samsung Electronics invested US$17 billion to build a chip factory in Taylor, Texas. This factory will start making semiconductors for fifth-generation network systems or artificial intelligence (AI) solutions later in 2024. However, it’s expected that the firm will end up spending more money due to the rising materials and labor costs in Texas.
- LG Energy Solution decided not to go ahead with their plan to build another battery factory in Indiana with General Motors (GM) for the same reasons. According to data from the U.S. Bureau of Labor Statistics, the cost of construction has increased by a third as of December 2023, compared to three years earlier.
- SK On, a battery company linked to SK Group, is facing financial stress too. The firm partnered with Ford Motor to construct battery plants in Kentucky and Tennessee. However, both companies had to delay starting operations at their second plant in Kentucky. This delay was due to increasing construction expenses and a slowdown in the electric vehicle industry.
- TSMC, the Taiwan-based firm, pushed back the opening of its first factory in Arizona by a year, now aiming for 2025. The firm also postponed the operations of their second factory from 2026 to 2027.
Investment in data center construction projects to support market growth in the United States in 2024
The fast-growing use of generative artificial intelligence technology has caused a huge increase in the need for AI data centers. The demand is poised to grow further in 2024, and as a result, investment in the sector is also expected to increase significantly over the next 12 months.
Microsoft and OpenAI, notably, are planning a US$100 billion data center project. Blackstone, the US-based equity firm, has also begun construction on a US$25 billion data center as part of its strategy to capitalize on the fast-growing AI market. These multi-billion-dollar projects will also support the growth of the construction market in 2024.
Alongside these major AI-focused data center projects, several other firms have announced investments in the sector. Fibrebond Corporation, in April 2024, revealed plans for a US$50 million upgrade and expansion of its production facility in Webster Parish. This facility supports various projects across the United States, including those related to data centers, telecommunications, industrial, and utilities.