Building Our Way Back to the Future
The construction industry worldwide and its complex infrastructure is slowly coming back to life. Tower cranes that dot city landscapes are moving. Cement mixers and pneumatic drills are waking from their enforced silence. From Boston to San Francisco and London to Sydney hammers, toolbelts, and work crews are returning to construction sites, but the disruption from the pandemic has been felt globally.
In Canada, upstream supply chains have seen restricted materials availability, especially ones that rely on Chinese imports such as the lighting fixtures manufacturing sector. Even Canada’s mortgage programs for first-time homebuyers has been affected by the coronavirus with consumer confidence being down and an expected drop in house prices.
Glenigan, a U.K. firm that specializes in sales and market analysis in the construction industry reports 2,434 construction sites suspended work, representing £58.0 billion of the U.K.’s total construction value. Building site closures are expected to cause the U.K. to miss out on key housing targets.
According to Savills, one of the world’s leading U.K. property agents says lockdown measures have brought on 220,000 new homes to a halt, undermining the government’s target of 300,000 homes built a year by 2025.
Germany’s commercial building sector is experiencing a decrease in construction contracts as companies need to reduce or delay their investment commitments to cope with the financial fallout from coronavirus.
Finally, despite avoiding some of the worst impacts of the virus, even in New Zealand demand for residential building construction is anticipated to be low, as negative consumer sentiment and declining incomes are discouraging people from buying new homes.
Reducing supply chain vulnerability
In the U.S. two main contributors stalling construction are mandates to keep distance between workers to two meters and Chinese supply chains. American residential construction firms currently rely on China for up to 80 percent of their materials driven mainly by cost. In Wuhan, the epicenter of the coronavirus, there are more than 150 manufacturing facilities that produce materials used by the construction industry.
Commercial builders in the U.S. have felt the strain, especially builders that rely on Chinese made goods or materials. This could mean higher material costs and potentially slower project completions, but there are also opportunities for domestic suppliers. It typically takes three weeks to move products to the U.S. from China, where quarantines have shut down work schedules, so the potential is there to fill that gap in supply.
However, that window of opportunity may not last long as RCLCO Real Estate Consultants director of strategic planning Charles Hewlett believes that the data from China and South Korea, shows that a return to “normal” business life will begin in late May or early June.
Reducing human interaction
What’s next for the construction industry? As contractors begin returning to work, they will face some new short-term and long-term realities such as long waits for building inspections, materials, tools and equipment, and skilled trade workers, especially as some projects will need to make up for schedule delays.
In the long-term, social distancing has become part of the construction industry lexicon. New techniques and innovative technology that will allow for a reduced level of human interaction like modular construction, remote and robotic drone inspections, autonomous rovers, 360-degree cameras, great tech adoption and artificial intelligence are all likely to accelerate.
A smarter way to work
With social distancing and supply chain concerns driving the need for change, the demand for data analysis solutions will be essential. sales-i helps construction material suppliers do just that. By empowering decision-makers to make better choices through up-to-date sales data, customer insights and understanding sales-i can support sales teams as they work to increase sales and market share. This understanding of the new landscape and how customer purchase patterns have changed, will provide massive advantages for those organizations that are nimble enough to adapt.
Back to work with a sense of purpose
As economies rejuvenate, and building sites come back to life the industry will have to address the structural changes in the supply chain regarding geographic sourcing of material and the use of technology. Consequently, keeping a healthy workforce until a vaccine or treatment comes along will be an ongoing challenge as will mitigating risk when it comes to interruptions to the construction schedule.