Since appearing in Wuhan, China more than 10 months ago, COVID-19 has spread throughout the world to more than 44.6 million people, and the effects of the virus have been felt on job sites all across the country. Due to the global pandemic, construction companies in the US have dealt with increased layoffs, project shutdowns, and increased construction costs. Although companies may be accustomed to dealing with these familiar difficulties on a smaller scale, the scope and duration of these challenges are at unprecedented levels. As the end of the year approaches, industry experts predict that many more complications, such as labor shortages, price increases, and supply chain issues, will persist into 2021.
Labor Shortages:
Prior to the COVID-19 outbreak this year, the Associated General Contractors of America reported that 81% of companies had difficulty in filling salaried and hourly craft positions, and the December issue of the NAHB/Wells Fargo Housing Market Index survey found that cost and availability of labor was the most significant problem builders faced. Even during the pandemic, labor shortages in the construction and trades industry have continued to plague companies. With employees often citing family responsibilities, a preference for unemployment benefits, or virus concerns as a reason not to return to work, businesses are struggling to find additional help for their projects.
Price Increases:
Due to the COVID-19 pandemic, the prices of construction materials have fluctuated during the year. In the past month alone, an Associated Builders and Contractors (ABC) report found that total construction input prices have increased by 1.6%. Additionally, they reported that eight of 11 subcategories faced monthly increases, with softwood lumber leading the way with a 27.4% registered price increase. On the topic of price increases and material shortages, Anirban Basu, the ABC’s chief economist warns, “Materials prices expanded nearly 2% in September and are now higher than they were at the same time last year. Despite the lingering pandemic, the global economy has been recovering, increasing demand for key commodities. Rapid viral spread, including in Europe and parts of North America, render materials shortages more likely during the winter months.” Despite a global recovery, COVID-19 continues to threaten price increases on most materials needed in the construction and trades industry.
Supply Chain Issues:
Although they were accustomed to working in the background of everyday life, supply chain operations are now in the spotlight due to the coronavirus pandemic. COVID-19 has forced companies to better prepare for more robust and reliable operations in the future. Businesses are emphasizing resiliency in their supply chain operations, so they are not reliant on a single supplier for any material. Companies are now working with multiple suppliers in various geographical locations to ensure they are prepared for any unforeseen challenges that may arise.
The Takeaways:
Even though we have all become accustomed to dealing with daily inconveniences caused by the COVID-19 pandemic, more problems, such as labor shortages, price increases, and supply chain issues, are inevitable for companies in 2021. Businesses that want to succeed during these challenging times must prepare themselves for all potential problems and have plans in place to deal with these upcoming issues. If your team is ever in need of any extra assistance, PartRunner is always available to help.
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