Nature of the Industry
Goods and services. Houses, apartments, factories, offices, schools, roads, and bridges are only some of the products of the construction industry. This industry’s activities include the building of new structures, including site preparation, as well as additions and modifications to existing ones. The industry also includes maintenance, repair, and improvements on these structures.
Industry organization. The construction industry is divided into three major segments. The construction of building segment includes contractors, usually called general contractors, who build residential, industrial, commercial, and other buildings. Heavy and civil engineering construction contractors build sewers, roads, highways, bridges, tunnels, and other projects. Specialty trade contractors perform specialized activities related to construction such as carpentry, painting, plumbing, and electrical work.
Construction usually is done or coordinated by general contractors, who specialize in one type of construction such as residential or commercial building. They take full responsibility for the complete job, except for specified portions of the work that may be omitted from the general contract. Although general contractors may do a portion of the work with their own crews, they often subcontract most of the work to heavy construction or specialty trade contractors.
Specialty trade contractors usually do the work of only one trade, such as painting, carpentry, or electrical work, or of two or more closely related trades, such as plumbing and heating. Beyond fitting their work to that of the other trades, specialty trade contractors have no responsibility for the structure as a whole. They obtain orders for their work from general contractors, architects, or property owners. Repair work is almost always done on direct order from owners, occupants, architects, or rental agents.
Recent developments. Construction is heavily dependent upon business cycles. Changes in interest rates and tax laws affect individual and business decisions related to construction activity. State and local budgets affect road construction and maintenance. Changes in regulations can result in new construction or stop planned projects. The effects of these various influences can be short term or long term.
