Construction Supply Chain

KatalystDI's Construction Outlook 2023 Edition

We've spent a lot of time talking to customers and players in the construction industry. Here are our predictions for the construction industry in 2023.

Over the past year we've spent a lot of time talking to customers and different players in the construction industry. While we leverage analytics to help customers make better decisions with deeper insights into construction supply chains, some trends surface from keeping a keen eye and interacting with experts in our industry. Construction is known to be slow-changing. However, new technologies in software, materials, and manufacturing have enabled a rapid change towards industrialized construction. Here are some trends we are excited about in the coming year.

Construction Costs in 2023 will rise

I'll start with the softball trends. New construction in 2023 will create more value than ever before. This will continue to stretch already overburdened supply chains. You don't need to look at too much data to figure this out. It's similar to the common consensus that interest rates will rise, materials costs will grow, the housing market will have ups and downs, and mortgage rates will rise.

All of these observations have been some of the contributing factors that have added to housing crisis trends. Supply chains and labor pools that are stretched thin correlate with rising prices in both industrial and residential construction. As a result, you will see new players emerge that are pushing the limits of how we build.

The construction industry value chain has shifted

It's most important to talk about the less visible trends in the construction industry. A construction value shift chain is here. If you’re interested in diving deeper,  I'll point you again to McKinsey's Executive Summary on "The Next Normal in Construction." Some of the trends I think you should pay attention to are highlighted below.

3D Printed Concrete Construction

Building a home is an example that many people outside the construction industry can personally connect to, so I'll start with the residential construction industry. An example of this value shift that received a lot of press attention last year was Hannah's construction of a single-family home utilizing both 3D printing and traditional wood framing structures. Building a house with this hybrid system allows the strategic use of the different systems to play to their strengths.

Dependent on state or local requirements, the home builder theoretically could choose from a variety of systems to build the best structure. This type of home construction makes it possible to build both standard and custom homes in less time for less money. 

In September 2022, the world's first 3D-printed bridge was unveiled in the Netherlands. The bridge, constructed using a concrete-like material, represents a major step forward in the use of 3D-printed construction for structural use in infrastructure. This bridge is expected to be a key prototype in the further development of infrastructure projects in the Netherlands and other countries as well.

The on-shoring trend continues. In August, President Biden signed the CHIPS and Science Act which, among other things, gave funding to create an industrial strategy to revitalize domestic semiconductor manufacturing. Several major companies followed suit with plans to build new facilities. Included among these is Intel's new facility in Ohio. Competitors TSMC and Samsung also announced new facilities. When building industrial or digital infrastructure, the first players who are operational will make the most money. It may not be as flashy as a 3D printed home or modular ADU. Still, the general contractors who take on these new projects will use more prefab, modular construction, and other modern methods of construction to ensure the facility owners who contract with them are operational in as little time as possible.

Companies that implement modern methods of construction (MMC) will prosper.

The construction value chain shift will create opportunities for firms that are innovators in the use of new technology to grow rapidly. We've seen these trends before; companies who adapted CAD to replace rooms of drafters grew much quicker than those that did not. The ones that could not adapt, no longer exist.Prefab is no longer just for industrial construction

Adopting modern methods of construction (or industrialized construction) does not imply the need to go out and buy expensive 3D concrete printers or use Robot Dogs to laser scan your site. Instead, it's about taking a holistic approach to how you plan, design, and build. That means thinking about your designs as a kit of parts, connecting with your supply chains during the planning and throughout your project, then leveraging the right approach to building (whether it's traditional stick-built, uses prefab, or completely modular).

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