Global Building Materials: What’s in store for 2024?
By Cobi Busst
After speaking with some of the top decision makers across the global building materials sector, Cobi Busst, Consultant in Beaumont Bailey’s Industrial practice, reflects on 2023 and looks ahead at 2024. Cobi highlights some of the themes that defined the last 12months and shares the sentiment he has gleaned following conversations with leaders from across the industry.
The only constant in life is change
If you were to credit the building materials industry with one thing over the last few years, it’s that it has shown incredible resilience and an uncharacteristically high level of dynamism and adaptability to changing market demands.
We have witnessed major shifts in attitude towards decarbonisation (led by Europe), which is now resonating across other geographies, creating demand in entirely new product lines and for new carbon capture technology within plants. Geopolitical events have constrained global supply lines, increased energy costs and pushed demand into a constant state of flux.
2023 was emblematic of just how much has changed over the past few years. Large industrial organisations have needed to be much more dynamic commercially to adapt and prosper, which has led to changes in power dynamics between many of the larger producers. Declining volumes in certain markets have been combatted by aggressive campaigns to grow market share and operationally, major overhauls and investments have been required to achieve more with less. The businesses that have adapted to the constant state of uncertainty over the past 12 months have emerged into the new year with the strongest foundations and boldest ambitions.
Rising cost of borrowing
A clear trend emerged in the latter part of the year, with an almost universal slowdown in Q4. This deceleration was the result of various industrial shocks (such as supply chain issues and rising material costs), which in turn impacted interest rates. High rates have persisted, leading contractors, developers and investors to exhibit caution. This has particularly impacted the residential housing market in Europe. The US, on the other hand, managed to maintain a strong position in comparison but many contractors and builders are still airing on the side of caution.
Political uncertainty looms
An unprecedented 49% of the world will be voting in a General Election in 2024, marking a major potential shift in global politics and the outcomes of these elections could significantly impact the global building materials industry. There are those who are pessimistic about this uncertainty, causing many developers to wait until the political landscape becomes clearer before pursuing major projects. Despite this and with political positions on the line, incumbent politicians are now incentivised to drive policy during what could be there final months in power to create a positive outlook by stimulating both business and infrastructure projects in early 2024. Some believe that preparations should be made to take advantage of this potential boom across the industry over the next year, and that it could be happening sooner rather than later.
Talent shortages and adapting leadership
We anticipate a continuation of issues with talent and labour shortages across the industry in 2024. Throughout 2023, there was a distinct lack of new talent entering the industry at entry level, with new generations increasingly prioritising flexible working arrangements, something the industry has never been known for. Even comparatively successful markets such as the US, with a much more positive outlook are struggling with skill shortages, particularly in areas related to process, production and maintenance. The fact remains that new engineers have been choosing more attractive and innovative industries for some time now and we are now seeing the impact of this trend. Over the last year, many major organisations have partnered with local schools and colleges to offer training apprenticeships and development pathways for the next generation, and 2024 should hopefully begin to reap the rewards of this investment.
Even at the executive level, whether a plant manager or a regional Vice President, talent within certain materials markets like cement and aggregates is constrained. After years of constant pressure and uncertainty, many individuals have been moulded into highly effective and resilient leaders and consequently have been attracted by higher paid opportunities in adjacent industries, draining an already finite pool of talent. The main leadership trend we anticipate for 2024 is a forced expansion of job profiles for many senior positions. Looking outside of the sector by breaking down previously un-negotiable expectations on specific industrial experience, with assessment based on core personality traits and competencies. Something head-hunting firms such as Beaumont Bailey have been championing for some time.
In conclusion…
One thing is for certain. 2024 will be a defining year for our industry. Organisations will need to continue demonstrating the incredible adaptability and resilience showcased over recent years, and the exciting years ahead due to rapid decarbonisation and investment, is enough for me personally to hold cautious optimism for the year ahead.
What do you think? We are continually looking to partner with thought leaders within this space to expand our understanding and exchange insights. If you wish to hold a speculative call about any of the themes discussed in this piece, please email cobi.busst@beaumontbailey.com