As the construction industry booms, talk of a potential downturn appears inevitable. Although it can be difficult to predict when various stages of the economic cycle will occur, management consulting and investment banking firm FMI Corp.'s 2019 forecast for the engineering and construction sectors emphasizes the importance of being prepared for a wide variety of economic conditions, according to www.constructiondive.com.
FMI predicts engineering and construction industry growth across all types of projects should continue for the next 18 to 24 months; however, growth will be at a slower pace than in previous years—at 3 percent compared with 5 percent recorded in 2017 and 2018.
FMI says contractors should "recession-proof" their companies by:
- Playing to the company's core competencies
- Being proactive in designing a business strategy, then focusing on the big picture
- Getting educated regarding business fundamentals to better respond to market shifts
- Knowing what their working capital needs will be for at least six months, if not further, into the future
- Becoming a standout in their market by developing solid client relationships; pursuing the types of projects that will remain consistent even if a recession comes along; and identifying which markets will allow for expansion
- Asking employees to work on their people skills and educating them regarding the company's priorities if a recession occurs
- Cutting what is not working in their businesses, which could include employees
FMI emphasizes keeping as much cash available as possible because having enough money in the bank could be the difference between a company surviving and closing its doors during a downturn.
FMI also suggests owners and managers be clear about the company's purpose and constantly ensure operations align with those goals; be agile and flexible; see industry leaders as a source of information and education; employ more creative business strategies; and identify key employees and help plan their futures with the company.
