After the pandemic of 1918, the 1920s came roaring in. Will the same expansive pattern occur this century? Construction industry experts see reason for optimism looking ahead over the next six months.
Contractor Confidence On the Rebound
Although commercial construction continues to lag, the Associated Builders and Contractors (ABC) point to plenty to be excited about in the Construction Confidence Index. How and when hotels, shopping centers and office buildings will be reimagined is still unknowable. But, in the construction industry overall, expectations for sales, profit margins and staffing levels are looking up over the next six months.
Anirban Basu, Chief Economist for Associated Builders and Contractors (ABC) told Construction Dive that a V-shaped recovery is likely already underway:
“The stimulus is working. If you pump this many trillions of dollars into an economy, it’s going to work,” Basu said. He ticked off the $2.2 trillion included in the initial CARES Act, the $900 billion relief bill passed in December 2020 and the $1.9 trillion American Rescue Plan passed last week.
The result, he thinks, could portend one of the biggest economic boosts ever seen. Indeed, just as the pandemic of 1918 prefaced the Roaring ‘20s of the 20th century, a new decade of expansion could lie ahead in the 21st.
“We’re going to come roaring out of early 2021 into a very different world with very rapid economic growth,” Basu said. “The Roaring ’20s comparison makes some sense. I think it’s possible that we’re just going to have a massive decade.”
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The steep rise in material prices and supply chain snafus continue to require contractor agility. The “stop-go” juggling in the industry has gone to a whole new level. Ali Mills, Executive Vice President of Pennsylvania-based highway contractor, Plum Contracting, provides this on the ground perspective:
“We can’t get the products fast enough into our yard, just to sit for who knows how long till we can use it, just so we can purchase it before the prices skyrocket,” said Mills, who noted that the resins in many of the highway materials she buys are also used in PPE, and are in short supply. “We’re also finding the things that were made fairly quickly and we never had trouble finding, there are now huge lead times.”
Contractors report that it’s gotten harder than ever to price jobs in the construction industry. Production facilities have faced delays and shortages as workers and families have coped with COVID-19 outbreaks. Transportation disruptions, including clogged ports and shipping delays, add to the disarray in the supply chain. The need for speed and agility is paramount, says Curt Hellen, President of Tulsa, Oklahoma-based commercial contractor Stava Building Corp:
“The longest a supplier can hold pricing in some of these materials is just two weeks,” said Hellen. “If you put a budget together for a project, will it be green-lit in that time? Then, can you come to terms with that supplier to actually lock down the material prices in that time?”
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Founded in 1930, Colonial Surety Company is a leading direct writer of surety bonds and insurance products across the USA. Colonial is rated “A Excellent” by A.M. Best Company and U.S. Treasury listed.