Market Trends July 2017
CONSTRUCTION'S LAGGING PRODUCTIVITY GAINS HIGHLIGHTS NEED FOR TECH
Construction is one of the least-digitized industries in the world. Total economic output per worker, or productivity, has remained essentially flat since the end of World War II. In many other industries, there have been productivity gains of as much as 1,500%, according to a McKinsey report from earlier this year. Stagnant productivity, combined with the sector's labor shortage, makes the construction industry "ripe for a robotic takeover," where it could reap benefits of technology, according to Recode. As of February 2017, nearly 200,000 construction jobs were left unfilled across the U.S., according to the Bureau of Labor Statistics. In addition, on average, 98% of construction megaprojects go over budget, so even small improvements in efficiency could result in hundreds of millions in savings. The construction sector could save $127.3 billion annually by making more use of drones in site planning, project updates, and safety enhancements, according to PwC. Among companies developing drones specific to the industry is Autodesk, which is working with a drone company to develop drone technology that can geotag photos, push data to the cloud and create orthomosaic image files.
FREE CONSTRUCTION TECHNOLOGY COURSES
ConTech Academy, powered by Autodesk MIM 360, is a new online, on-demand continuing education site for construction pros. The academy promises to teach people how to use the newest construction technology. Courses include Quality in the Digital Age, Site Safety with Mobile, Site Surveys with Drones and Site Layout with Robotic Total Stations. Attendees learn at their own pace and can earn free continuing professional development credits, download practical guides, templates and starter packages, learn new technical skills and trends and get tips from construction experts. All courses are free at https://contechacademy.bim360.autodesk.com.
LOWES PARTNERS WITH VIRGINIA TECH
Lowe’s and Virginia Tech are working to develop an exosuit, a wearable robotic suit with lift-assist technology for Lowe’s store employees, that is designed to help employees lift and move product through the store more efficiently and with less muscle fatigue. The idea came out of Lowe’s Innovation Lab, which focuses on disruptive technology. The Lab envisioned a future where the use of technology could give employees “superpowers” and help maximize performance.
PRINT A 3D HOME
MIT is working on a robotic system that can 3D print homes at remote sites using a variety of materials, including the earth that's immediately at hand. The robotic 3D platform, known as the Digital Construction Platform, should mimic biology by viewing the building as an organism digitally designed and built with a system that seamlessly connects and supports the whole. The technology is focused on building without the necessity of parts while producing not only the basic structure but also interior elements. Working from a mobile, tracked platform, one of the newest 3D printing systems promises to enlarge and extend the technology to the construction of buildings in isolated areas and harsh conditions. Still in development at the Massachusetts Institute of Technology, the robotic 3D printing system has successfully built the walls of a 50-foot-diameter, 12-foot dome in less than 14 hours.
APPLE ENTERS SMART HOME MARKET
Apple introduced an Intelligent Home Speaker during their recent Developer’s Conference. Strategy Analytics forecasts more than 12 million smart home speakers will be purchased globally in 2017, with Amazon’s Echo accounting for 80% of the volume. Apple’s entry, called the Home Pod, will sell for about $350 in the U.S., U.K. and Australia, and will be available in December. The main version of Amazon’s Echo is $180; Google’s Home speaker is $130. People will be able to interact with Apple’s assistant Siri as well as control smart devices, but Apple says they are also focusing on delivering a higher-quality music experience.
MILLENNIALS WORK HARDER, EARN LESS
Inflation adjusted wages have fallen since 2000. Recent estimates from the Department of Labor show that inflation-adjusted wages for college graduates have fallen more than 5% since 2000. Wages for high school graduates have fallen 11%. The Census Bureau estimates that millennials with full time jobs earn $2,000 less in inflation-adjusted wages than their peers did in 1980. And expectations are changing. People born in 1940 had a 92% chance of earning more than their parents, those born in 1950 had a 79% chance, but those born in 1980 have just a 46% chance of earning more than their parents. And more than 20% of 18—34-year-olds live in poverty. There are several theories as to what is causing this decline in the standard of living. Some speculate that it’s the enormous debt load created by the grandparents and parents of millennials that is weighing down the economy; others blame it on stagnant productivity and massive student debt.
WHY PEOPLE AREN’T BORROWING AGAINST THEIR HOMES
Americans have a tradition of borrowing against the equity in their homes to do home renovations and finance big purchases. Housing equity now equals 58% of home values, the highest point since 2006, and only 3.2 million of the 76 million owned households in the U.S. have negative equity; in 2011, there were 11 million households with negative equity in their homes. However, borrowing against home equity is still near the post-recession low.
Banking analysts say that despite low interest rates it’s become harder to borrow. The web of lending regulations created after the financial crisis is still in place and banks are demanding nearly pristine credit before they will write equity lines. That has dampened what is called the wealth effect, the tendency of households to spend more when home values rise. Americans carry slightly more debt than before the recession, but that is primarily due to huge increases in student loans.
Healthier home equity borrowing could add three-quarters of a percentage point to GDP each year, according to estimates from the New York Fed. Younger and less affluent Americans are less likely than before the recession to own a home or have much equity to borrow against. Older, wealthier Americans now own a larger share of America’s housing wealth, but are less likely to borrow for big purchases or projects. In 2017 Americans over 60 owned one-third of housing equity, up from one-fifth in 2006. Homeowners with credit scores above 780 own half of all housing equity, up from 40% a decade ago.
Americans borrowed an average of $181 billion annually against homes from 2000 through 2003, before the reckless borrowing of the housing bubble. From 2012 through 2015 they borrowed just $21 billion annually. Banks must now hold more money in reserve for each equity line they extend, so the business is less attractive to banks than making loans that require lower reserves. And Fannie Mae and Freddie Mac can now send home loans that default back to the banks that provided them, and Fannie and Freddie loans are now costlier because they are required to impose higher fees.
EMPTY NESTS FILLING BACK UP
Millennials ages 20—26 expect to pay off their student debt by an average age of 35, although 14% of them think they’ll still be paying it off when they are 50, and 32% plan to have it paid off before they turn 30. Their parents may be surprised to learn that one of the ways they hope to meet their goals is by moving back home after college, according to TD Ameritrade’s Young Money Survey. The survey revealed that 32% said they owed anywhere from $10,000 to more than $50,000 on student loans. Nearly half of the post-college millennials surveyed admitted they have moved back home, and 25% of those still in school plan to do so after they graduate. They won’t be embarrassed about living with Mom and Dad until they are at least 30 years old. Student debt impacts their plans in many other ways, saying it would delay them buying a home (40%) saving for retirement (31%), moving out of their parents’ home (27%), having children (25%) and getting married (21%).
AMAZON PRICE-MATCHING SERVICE
An online price-matching service launched in Seattle in 2015 has a goal of helping shoppers find “Amazon.com prices” at brick-and mortar stores. PriceLocal recently added 10,000 new stores to its database, including Walmart. The service already includes Home Depot. PriceLocal adds a button to a web browser. When a customer finds an item they want on Amazon, they can click on the PriceLocal button and a local store will respond if it can match the Amazon Prime price for the item. Store owners or employees get emails and text messages with the customer’s request. If the store agrees to match Amazon’s price, the customer is emailed a coupon to buy the item in store. The service works only with Amazon Prime-eligible items or items with free shipping.
PRICE GYMNASTICS ON AMAZON MARKETPLACE
Amazon’s marketplace opened in 2000 and now sales on the marketplace account for 49% of the goods Amazon ships. Of the more than 2 million registered sellers, 100,000 each sold more than $100,000 in goods in the past year, according to Amazon. What most consumers don’t realize is that prices on the marketplace can literally change in minutes as sellers use complex algorithms to end up in the coveted BUY box, raising and lowering prices in response to demand. Some of the more sophisticated companies like Feedvisor claim to use artificial intelligence to learn the market dynamics behind every item in a catalog. Sellers who rely on Feedvisor let the system handle price increases and avoid bidding wars that can cause sudden “flash crashes.” Amazon itself is noted for monitoring product categories and jumping into categories that are selling well, even going so far as to develop a house-branded version of the product. For example, the price of a pack of Duracell brand AAA batteries fluctuates from day to day on Amazon, but the price of Amazon’s own brand of AAA batteries is stable, and at the time of this report Amazon brand batteries cost nearly fifty percent less per battery than Duracell’s.
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