Construction has experienced a variety of changes over the past several years and the pandemic has only accelerated those changes in the industry.
In this article, we’ll talk about the connection between the construction industry and the economy at large, problems the construction industry is facing, and opportunities for growth.
COVID-19 Construction: What’s New in the Industry?
The construction industry has been slow to change, but the pandemic has forced its hand. And considering how tightly linked the construction industry is linked to the economy at large, it’s for the best.
Construction And The Economy Are Strongly Linked
When people feel comfortable with the state of the economy, they invest and upgrade. And real estate is a primary indicator of those investing and upgrading. Whether it’s residential homes, a bigger, better office space, or a larger shop or factory to accommodate additional output, people build up and out when they feel like the economy is doing well.
The opposite can be true too. When construction begins to slow, that’s a sign that people are pulling back and hedging their bets when it comes to the success of potential large investments.
As such, construction is important, because it’s an indicator that the economy is either growing or shrinking.
The Pre-pandemic Labor Shortage
The construction industry grinded to a halt at the very beginning of the pandemic when everything shut down. Those who worked in construction were quickly deemed essential, but not before losing 1 million jobs.
But the problems in the construction industry started before COVID-19. Productivity was stagnant. Digitization wasn’t happening industry-wide. Many stories have demonstrated that the industry as a whole had a hard time dealing with low profitability due to common building approaches, fragmented work ecosystems, and the high share of on-site manual labor. All of this, coupled with the effects of COVID-19, piled on top of the ever-growing increase in sustainability requirements, rising costs, and labor scarcity and created a large problem for the industry and those needing their services.
Things to Watch Out for as a Small Business
The pandemic has hit virtually every industry in a significant way. Some industries like software companies have benefited greatly, while others like the entertainment industry have been hit hard as they’ve seen their businesses come to a complete stop.
And while being deemed an essential service, construction companies have seen their fair share of problems crop up during the pandemic.
Here are just some of the short-term and long-term changes that have been felt industry-wide.
Short-Term Changes
Some changes that took place in the construction industry were felt immediately. And while we hope they’ll be resolved quickly after the pandemic ends, we still have to deal with these problems while the COVID-19 still affects the world.
Here are some of the most acute, short-termed changes happening in the construction space.
1. Low material demand
People who work in construction know that supply chain issues aren’t new. Prior to COVID-19 the entire industry began experiencing material demand issues, especially as it related to getting goods from countries like China.
But COVID-19 has exacerbated the problem substantially. Companies are having a difficult time hiring, meeting fulfillment, finding proper shipping services, dealing with the inevitable sick leave that people have to take if they contract the coronavirus, and implementing new safety protocols to help keep the work environment as safe as possible.
Each of these issues has led to longer deadlines, rising cost, and slower build progress. Not only is this difficult for people in the construction industry, but it’s also for those looking to build as the cost of time and money get passed off to the person investing in property.
2. Economic downturn
Along with the difficulties, comes the acutely-felt economic downturn. As some businesses screech to a halt, investments have frozen, cashflows have slowed, and as a usually-volatile industry who was already experiencing pre-pandemic problems, the construction industry has felt the effects of this downturn more acutely than most.
As vaccine production and distribution become more and more accessible, the primary drivers of this economic turmoil will hopefully begin to dissipate. Until then, the best thing those in the construction industry can do is determine what the current normal looks like, manage expectations, and make plans to deal with these issues until they’re resolved in the future.
Long-Term Changes
Other, more systemic problems have been revealed during this pandemic. It’ll take much more time to resolve these issues.
Here are some of those long-term changes that need to be dealt with.
1. Low material supply
As manufacturers of lumber, concrete, metal and other construction materials continue having difficulty fulfilling orders, those in construction will continue to have a hard time finding the materials they need at a price that was considered reasonable just a year or two ago.
As people adapt, these problems should begin to lessen, but it’s important to remember that the construction and manufacturing industries are both facing large employment issues and those problems cannot be solved overnight. It will take time for both industries to reach a healthy equilibrium where they can, once again, fulfill all orders in a timely fashion at a more affordable price.
2. Fewer construction jobs
Due to the sudden halt in construction, a lot of employees found themselves laid off in the process. And while many have come back, the slowing of production, the ability to find jobs in other fields, and the varying lockdowns worldwide, have either prevented many more from coming back and convinced others that they shouldn’t return at all.
The massive reduction in jobs will take time to fix. The employment problem will eventually be corrected as pay and working conditions, along with alternative employment opportunities, meet with the demand for additional construction work.
But, for the time being, the low job opportunity due to the sudden pull in investing may cause difficulties for the construction industry and those wishing to work in it.
3. Longer project time
Construction project deadlines continue to grow longer and longer. And there’s no sign of that stopping any time soon.
As construction crews continue to stay small, materials continue to be difficult to obtain, and the pandemic continues to make sick leave a more frequent occurrence, projects will inevitably take longer than usual to finish. This new reality will have to be weighed by potential investors to determine whether or not now is the right time to put money into a new building.
As stakeholders and industry leaders begin modernizing their practices, these problems will start improving, but we should expect this problem to continue into the future.
4. The fall of prefabrication
Many major construction companies have depended on prefabrication for years. But on-site prefabrication requires more workers on site and can cost more than alternatives such as modular adoption.
Modular adoption helps take advantage of assembly-line style efficiency and the climate controlled environment these builds take part in helps to speed up production and lessen labor costs. Modular adoption also makes it easier to establish, implement, and enforce site safety while reducing congestion.
But changing the way you do business takes time and it’ll require industry wide changes before modular adoption can make a real difference on the cost or speed in which something gets built.
5. Continued labor shortage
The short-term effects from companies laying off their employees has been felt far and wide by everyone. And the effect will continue to be felt as there’s that estimated need for 1 million construction workers country-wide to return to pre-pandemic construction capabilities.
The major problem right now is that, as things begin to open up again, a lot of laid off workers are finding or have already found jobs elsewhere. So while firms are slowly beginning to ramp up their hiring, they are having a hard time finding people to fill those roles. As we already discussed, pay, working conditions, and other factors will have to change in order to attract the necessary workforce needed to continue building.
Opportunities for Small Businesses
While the problems in construction are many, there are opportunities to review how your particular company does business and improve work processes to help return to profitability.
Here are some of the more exciting opportunities construction companies are finding to innovate during this time of struggle.
Digitization
While large amounts of work in construction rely on physical, in-person labor, that’s not true for every element of the industry. There are plenty of job responsibilities related to construction project management and architecture that could be done remotely on a digital platform. Additionally, we’re likely to see an additional decrease in team building events and social gatherings among coworkers as companies continue to adapt and change in order to maximize productivity and minimize the spread of disease.
Even as current outbreaks are subsiding in certain areas, many state and local officials continue to put more measures in place to make sure that the trend continues downward. This will only further incentivize construction companies to digitize work wherever possible in order to continue profitability.
Improved worker safety
One thing the pandemic did is put a spotlight on different systems world-wide and show how those systems in one way or another fell short. The same thing happened in construction. And as employers try to attract talent to come work for them, they’ll have to adapt to make the job site safer for employees.
This may look like temporary changes like staggered shifts, temperature checks, and top-to-bottom disinfections of job sites, or it may look like improved hours, updated equipment, and better pay. Industry experts believe these needs will help give construction unions additional leverage to make more demands on behalf of employees.
Finding new niches
The pandemic has not only altered how we do the work we do, but it has also altered what kind of work we do. For example, retail, hospitality, and entertainment construction have all decreased in significant ways over the course of the COVID-19 pandemic. But healthcare construction has gone up enormously. So has warehouse construction. Even single-family home construction has increased as people have attempted to leave dense urban housing in an effort to keep socially distant.
Evidence would suggest that, while we hope that healthcare construction won’t have to go up continually, that people have grown to like and accept retail by mail and more and more companies are going to need warehouse spaces where they can store and ship their product from.
Although construction companies are suffering industry-wide, it’s more than possible to find a new niche and be successful in that niche.
New Takes On Training
Getting into the construction industry looks a bit different than getting into other fields. There isn’t a lot of sitting around in a classroom. The learning is mostly hands-on work. But there’s still a way to hire entry-level employees and train them to do valuable work. Taking advantage of mask wearing, rotating time slots, and safer shop layouts can all help you attract people looking to enter the industry, get them up to speed as quickly as possible, and have them help move projects forward at a faster pace.
All it takes is a bit of added creativity to help find and train potential employees so they can add value to the company while keeping everyone safe in the process.
Moving into adjacent spaces
For construction companies that feature a heavier architectural element to their work there’s a large opportunity to build for the pandemic. Most office spaces now pack employees into small spaces. Those spaces may look like trendy, open space offices or they may look like a row of cubicles.
But companies who are able to help feature COVID safe work environments that are designed to keep employees safe and productive while in the office stand to gain a major competitive advantage against their competition who’s just waiting the pandemic out.
And while the pandemic will only be temporary, the reality is that it will take employees a long time to feel comfortable coming back to the office. But luckily, design can help play a role in resolving their concerns with leaving remote work behind.
National Funding Can Help You Bridge The Gaps In Funding
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