Buildings and Infrastructure

This end-user segment includes a variety of products used to build, decorate, protect, maintain and renovate buildings and infrastructure interiors and exteriors. It is our largest segment (44 percent of revenue), with the Maintenance, renovation and repair sub-segment particularly important for our Decorative Paints business.

Trends

There was significant contraction during the recession, with limited recovery in mature economies. In Europe, most analysts believe the decline has halted and in some markets, such as the UK, housing transactions and house prices are rising. Moderate growth levels have returned in North America. Government stimulus activity remains a factor in many markets, notably infrastructure, although this is reducing somewhat. The outlook for high growth regions remains positive due to population and wealth growth, but growth rates going forward are lower, particularly in China, where growth has moderated considerably.

Future sustainability developments

Given the contribution of the built environment to scarce resource use, demand for products that contribute to a reduction in non-renewable energy use and energy cost reduction is a major factor, and this will continue. According to the World Business Council for Sustainable Development (WBCSD), by 2050, 70 percent of the world’s population will live in urban areas and 95 percent of new building stock will use zero net energy. The proportion of buildings heated by fossil fuels will also fall below 6 percent. Sustainability issues beyond energy use and carbon emissions, such as air quality, will continue to have an impact.

Implications for strategy and actions

We will need to manage product lines and restructure operations to respond to structurally reduced demand levels in mature markets. In high growth regions, we must have strong market positions and brands where relevant. Globally, we need business models based on a value-cost trade-off and must innovate to respond to sustainability and other end-user needs to create triggers for purchasing our products. We also need to continue restructuring in mature geographies, while in high growth areas we must ensure strong positions and appropriate business models.

Total construction 1
$ billion, output 2013

Buildings and Infrastructure – Total construction in $ billion, output 2013 (line chart)

Total market new build construction 1
hundreds units

Buildings and Infrastructure – Total market new build construction in hundreds units (line chart)

Total market maintenance and repair 1
$ billion, output

Buildings and Infrastructure – Total market maintenance and repair in $ billion, output (line chart)

Source: IHS/Construction IC, January 2014.
2 BRI: Brazil, Russia, India.

Where some of our products are used:

Buildings and Infrastructure – Where some of our products are used (diagram)