Trenchless Technology

JAN 2019

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next great shift in telecom infrastruc- ture ( i .e., from wireline to fiber). With- out the far-reaching densification of deep fiber, "carriers will be unable to support the projected four-fold in- crease in mobile data traffic between 2016 – 2021." Multi-year initiatives led by telecom service providers will create fiber installation, small cell de- ployment , and on-going maintenance contract opportunities for those op - erators with the requisite fiber con- struction capabilities. Though there are some that expect an economic pullback within the next year or two, FMI Research projects on- going growth through the forecast pe- riod (4.3 percent annualized growth from 2018 to 2022). That being said, the rate of such growth is expected to decelerate and ultimately plateau around 3 to 4 percent by 2020. In the meantime, contractors and utilities continue to capitalize on low interest rates (still comparatively low despite the end of the Fed's quantitative eas- ing initiative), taking on additional work to tack on to already record-high backlogs. During the second quarter of 2018, the Associated Builders and Contractors' Construction Backlog In- dicator expanded to an all - time high of 9.9 months (up 12 percent over Q1) and FMI 's Nonresidential Construc- tion Index remained above fifty for the 26th consecutive quarter (scores above 50 indicate expansion). The impact of the current administration on the construction industry is also worth mentioning . Decreasing regu- lation and the potential for a trillion- dollar infrastructure plan could have a transformative impact on industry spend in the near future—particularly in the heavy civil and nonbuilding structure construction segments. Industry Spotlight – Water / Wastewater The water and wastewater segments will play a critical role in stabilizing utility-related construction through the forecast period. FMI Research projects that both segments, taken together, will grow at an annualized rate of ~4 percent from 2018 to 2022. While water and wastewater construc- tion spend is not expected to rise to the level of industry highs recorded in 2008 (just prior to the residential construction collapse) it is expected to come close by the end of the forecast period. Demand in both segments will be driven by the replacement of ag- ing infrastructure, population growth, residential and utility construction, and state and local government spend- ing . In addition, the opportunity for on-going , lower-margin (but less cy- clical) maintenance work will grow as additional capacity is installed. This segment accounted for ~$14 billion in revenues during 2017 (not accounted for in the FMI forecast). While per capita water consump - tion is expected to decrease as a result of greater conservation measures tak- en in response to higher usage rates (approved by Public Utility Commis- sions to fund infrastructure improve- ments), any corresponding decrease in W W W.T R E N C H L E S S T EC H N O LO GY.C O M 41

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