Governments on all levels will have more resources to fund industry projects
New York, NY (PRWEB) February 12, 2015
Over the past five years, the Road and Highway Construction industry's growth was caught in heavy traffic. Industry players build, expand, alter and reconstruct roads, highways, driveways, streets and runways for the public and private sectors. Despite the recession, demand for industry services remained stable prior to the five-year period, as governments on all levels rolled out countercyclical stimulus spending programs that included added funding for infrastructure such as highways and roads. According to IBISWorld Industry Analyst Maksim Soshkin, “private sector demand also increased as low interest rates and government incentives encouraged the consumers to buy new homes, thereby boosting residential construction and related industry-specific projects.” Furthermore, Canada's boom in oil production led to a rise in the construction of private roads connecting oil extraction operations.
Nonetheless, stimulus spending was temporary and the local, provincial and federal governments were eventually forced to deal with budget deficits caused by lower taxes and higher welfare and stimulus spending. As a result, public sector demand for industry projects began to fall in 2011. Moreover, as fears of a housing bubble increased and government incentives were withdrawn, residential construction stagnated, causing private sector demand to fall. Therefore, in the five years to 2015, industry revenue is expected to decline. However, limited government budgets have encouraged greater use of public-private partnerships (PPPs), which are joint ventures in which the public and private sectors split the cost and responsibility of taking on infrastructure projects. Moreover, in 2013, Canada introduced the $53.0 billion New Building Canada Plan, the largest and longest federal infrastructure plan in Canadian history.
In the five years to 2020, industry revenue is expected to increase. As the economy continues to grow, government tax incomes will rise. “Consequently, governments on all levels will have more resources to fund industry projects, including funding through the New Building Canada Plan,” says Soshkin. Moreover, increased traffic congestion, urbanization and aging road stock will further encourage investment in Canada's road network. Finally, private sector demand will also begin to recover as residential construction picks up and resource extraction industries continue to build private roads.
For more information, visit IBISWorld’s Road and Highway Construction in Canada industry report page.
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IBISWorld industry Report Key Topics
The Road and Highway Construction industry constructs new highways, streets, roads and airport runways (excluding elevated roadways). The industry also includes highway and street construction management operators and special-trade contractors who perform subcontract work on projects (e.g. grading, laying pavement, installing guardrails and installing public sidewalks). Establishments may subcontract some or all of the actual construction work.
Key External Drivers
Industry Life Cycle
Products & Markets
Products & Services
Globalization & Trade
Market Share Concentration
Key Success Factors
Cost Structure Benchmarks
Barriers to Entry
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