GROWTH FROM A RECORD POSITION

Last year’s ICON 200 saw record sales – this year’s table manages to surpass it

It is becoming a cliché to talk about how resilient the construction industry is in the face of a raft of challenges – inflation, skills shortage, supply chain disruptions – but that doesn’t make it any less true. The latest edition of the ICON 200 provides yet more ammunition for this viewpoint: sales have hit their highest ever level at US$2.028 trillion.

This figure is not quite as outlandishly high when you consider that last year’s ICON 200 total was US$1.968 trillion. That this year’s list (which looks at sales for 2022) is at a recordhigh is due to a number of factors, but one is more prominent than the others: China.

China-based contractors account for approximately 44% of the total amount. To put that into context, the country with the next highest percentage is the US with 13.7%.

The results of the number one company on this list are remarkable. China State Construction & Engineering (CSCEC) had sales in 2022 of US$303 billion – almost double that of the second placed contractor. On this year’s Fortune Global 500 list CSCEC rose to ninth position from 13th in 2021.

Dominance of Chinese contractors

The top five places on the list – like last year – are all taken up by Chinese contractors. All five of these companies saw their sales increase, albeit some by a few percentage points.

The performance of these contractors underlines the strength of the country’s Belt and Road Initiative around the world as construction activity in China itself in 2022 was down.

Vinci is the first European contractor on the list, holding steady in sixth position. Fellow France-based contractor Bouygues is in seventh and then comes the first movement in the top ten, with ACS rising from ninth last year to eighth. The Spain-based contractor swaps places with the Shanghai Construction Group, which falls to ninth due to its sales declining. US-based residential developer Lennar rounds off the top ten, swapping places with DR Horton, another US-based housebuilder.

Some of the biggest upwards movers on the list have been from those firms involved in the sector of home building, with US-based KB Home and Meritage Homes rising 14 and 15 places respectively. Several firms drop out of the table due to going out of business, such as Australian-based Clough.

Eye on the future

That the total of the ICON200 has increased from last year’s record high, despite the relative weakness of construction in China, is a testament to the global strength of the market. Other countries, such as the US, made up for this decline and, with China abandoning its zero Covid policy, domestic sales for its contractors will surely be better in 2023 than in 2022.

Issues remain for the industry and at the front and centre are rising prices and a lack of workers. Inflation remains high globally – the International Monetary Fund predicted that global headline inflation in the baseline is set to fall from 8.7% in 2022 to 7.0% in 2023 on the back of lower commodity prices but underlying (core) inflation is likely to decline more slowly. Inflation’s return to target is unlikely before 2025.

The lack of workers remains a real issue. For example, in the US the Associated General Contractors of America found that despite nearly two-thirds of metro areas adding construction jobs in the last 12 months, the total would have been higher if contractors could find more qualified workers.

Whichever way you look at it, it is clear that Chinese contractors are the driving force behind the sales of the ICON 200. There are nine Chinese contractors on the list – two of them increase their placing, five stay the same and just two of them drop a position. Between them, these nine contractors generate an incredible amount of money – US$893 billion. Put another way – they account for 44% of the total amount of the ICON 200. This is the same percentage as last year and shows how strong these contractors are globally that they can keep the same figure despite construction activity in China falling in 2022.

The US and Japan have the joint highest number of contractors at 33 each. However, those from the US generate considerably more money at US$277 billion (13.7%) of the total compared to Japan’s US$169 billion (8.3%). France, with just eight companies on the list, almost generates as much money as Japan, with France-based firms totalling US$153 billion (7.6%).

US-based contractors had a strong year in 2022; of the 33 companies 21 saw their placings increase, three stayed the same and nine fell. The percentage total of 13.7% is an increase on last year’s 12.5%. The results of Japan-based companies are in stark contrast, with 29 of the country’s contractors dropping down the rankings, two holding steady, and just two seeing their placings increase.

Next there are three European countries: France, UK and Spain. France only has eight contractors on the list, but they generate US$153 billion, with Vinci accounting for US$64 billion of this. The UK has the third highest number of contractors on the list at 23 but these generate the (relatively) small sum of US$80 billion – this is less than the US$82 billion from Spain’s eleven contractors.

There is only one contractor from South America on the list, from Brazil, and two from India. There are three from Africa, all based in South Africa.

Residential construction has been a driver for many of the contractors on the list and there are fears that in some major markets this sector could decline.

Despite some dark clouds on the horizon, the overall picture remains bright. Construction is an essential industry and Governments around the world are showing little let-up in their desire to commission large infrastructure projects.

Last year it was predicted that this year’s table would see a small decline, a ‘soft landing’, but instead the ICON 200 grew from what was a record amount. One would expect for the table next year to remain at roughly the same level but, such is the strength of the sector, another strong rise can’t be ruled out. iC