Construction Industry Archives

WASHINGTON, D.C. —The construction industry registered 388,000 job openings in November, according to an Associated Builders and Contractors (ABC) analysis of data from the U.S. Bureau of Labor Statistics’ Job Openings and Labor Turnover Survey, which defines a job opening as any unfilled position for which an employer is actively recruiting. Industry job openings declined by 2,000 in November but were up 22,000 from the same time last year.

“Once again, good news is bad news,” ABC Chief Economist Anirban Basu said. “The economy-wide number of job openings remained elevated at approximately 10.5 million in November, virtually unchanged from October’s revised estimate. That’s the key takeaway in a still-red-hot labor market, as many employers continue to aim for expanded capacity to satisfy unmet demand. That is the good news.

“The bad news is obvious,” Basu continued. “Despite raising interest rates during the last 10 months, the Federal Reserve is still grappling with an excessively tight labor market associated with rapid compensation cost increases. To return inflation to its 2% target, the Federal Reserve needs a looser labor market with fewer job openings, higher unemployment, and slower compensation growth. The implication is that interest rates will continue to rise, adding to construction project financing costs and potentially setting the stage for sharp declines in activity in many privately financed construction segments.”

Construction Industry Navigates One Challenge After Another

By Joseph Bednar December 23, 2022

Construction

Waiting for a Correction

Dave Fontaine Jr. says a ‘correction’ on cost and supply challenges would help builders and buyers move forward on projects with confidence.
Photo by Joe Santa Maria, Kill the Ball Media

Dave Fontaine Jr. hears talk of a recession that could affect the construction industry, but he prefers to use a different word: correction. After a couple years of soaring costs, he feels one is necessary, and coming.

“I think in the last two years, costs have risen over 20% each year. When you go back over the last 30 years, the average increase per year is 2% to 4%,” said Fontaine, CEO of Fontaine Brothers Inc. in Springfield. “It’s been very difficult for projects to absorb, and for clients to absorb. We’ve seen several projects — some we’ve been involved in, some we’ve watched from the outside — that have either stalled or been canceled because of cost challenges.

“We’re hopefully undergoing a correction. And I like to use that word, the idea being that we need to get back to a correct place. Sometimes [rising costs] are a necessary evil: things get overheated; COVID brought challenges with supply chains, labor, and transport that affected materials and pricing. But I think, frankly, construction costs are in need of a correction. When that happens organically, when we’re able to broaden the supply chain again, get things flowing … we’ll get back to a place where people know what the cost is to build, and move forward with confidence.”

That said, Fontaine noted, “it’s been a really good year; we’ve been busy across all the geographies we serve and all the different sectors as well.”

Bill Laplante, president of Laplante Construction Inc. in East Longmeadow, which specializes in home building and remodeling, had an equally strong report.

“The demand carried over from 2021; demand for remodeling was really high, and a lot of that was just people being home during the pandemic. They were able to work from home and wanted to make a nice office or put a bedroom suite in.”

“We had a fantastic 2022. It was probably one of our best years in the last 20 years,” he said, noting that some of that success was driven by expansion onto Cape Cod, but some was based on demand that carried over from 2021. “Some of it was pandemic-related, but we actually have a really strong outlook for 2023 with the jobs we have in the pipeline.”

He agreed, though, that supply and cost challenges have been discouraging.

“Some materials, things like plastic pipe and conduit, have increased five times the cost. It’s not as simple as a 8% or 9% increase here and there; for some materials, it’s completely off the charts. It makes it difficult to sign a contract and build a house, when you’re not going to be purchasing those materials for four months, not knowing where things are truly going to land. Obviously, once costs go up, you try to plan for the next house.

“The supply-chain issues have been brutal over the last couple years,” he went on. “It seems like it’s something different every week. You can’t get the plastic for the buckets for drywall cement. Then the next week, you can’t get runners for cabinet drawers. The next week, you can’t get a hinge. That’s been very, very difficult. Plus, a lot more planning goes into it, with the increased lead times for windows, doors, and appliances. We need to get selections a lot sooner than we would from our customers so we can get orders placed. With high-end appliances, we’re out 10 to 12 months.”

Fontaine echoed those sentiments. “Lead times are still challenging. There are some items getting better, which is good, and most items are not getting worse, which is also good. But we’re still seeing a lot of difficulty with items like electronic components, chips, boards, stuff like that. That’s affecting things like rooftop units, electrical equipment, and generators.

Bill Laplante says demand has been up for new homes and remodels alike, despite rising interest rates.

“For us, it’s not anything that’s stopped our projects from opening on time,” he added, “just something we’ve had to pay much more attention to, and we’ve become more creative with how we procure things and meet our schedules.”

Ups and Downs

Despite reports that some area contractors had a strong 2022, rising interest rates are expected to impact construction nationally in 2022. The 2023 Dodge Construction Outlook predicts U.S. construction starts will drop by 3% next year.

Meanwhile, the Architecture Billings Index, a forward-looking indicator for construction activity, dropped significantly in October after 20 months of positive growth. And the Associated Builders and Contractors backlog indicator, which tracks work construction firms have booked but haven’t yet begun, fell below its pre-pandemic reading from February 2020, largely due to a decline in the commercial and institutional category.

“The construction sector has already started to feel the impact of rising interest rates,” said Richard Branch, chief economist at Dodge. “The Federal Reserve’s ongoing battle with inflation has raised concerns that a recession is imminent in the new year. Regardless of the label, the economy is slated to significantly slow, unemployment will edge higher, and for parts of the construction sector, it will feel like a recession.”

Some sectors are expected to perform well, he added, including data-center construction, manufacturing starts — especially chip-fabrication plants and electric-vehicle battery plants — and publicly funded infrastructure projects. Meanwhile, the office, warehouse, hotel, and retail sectors are expected to lag. Branch also expects single-family starts to drop about 5% next year.

“There’s got to be more emphasis put on job training and vocational schools. The opportunities out there for tradespeople, and what a skilled tradesperson can make, are incredible.”

Laplante said remodeling, additions, renovations, and home improvements comprise 30% to 40% of his firm’s work, and the pandemic played a role there.

“Again, the demand carried over from 2021; demand for remodeling was really high, and a lot of that was just people being home during the pandemic. They were able to work from home and wanted to make a nice office or put a bedroom suite in. We saw that pretty much across the board. People weren’t traveling overseas; they were putting in poolhouses and sunrooms and outdoor kitchens, things like that.”

While he expects interest rates to slow activity in the home-building and remodeling industry, Laplante said the large size of some of his projects, which can take from six months to a year, tends to dampen any slowdown.

“Smaller remodelers are probably seeing more of an effect with interest rates slowing things down quicker than we will see it,” he said. “And then, of course, we’re working with a lot of customers who aren’t interest-rate-sensitive.”

He added that subcontractors may see a slowdown before builders because they don’t deal with the same project duration.

The Cape Cod expansion is a strategic move partly based on the fact that Laplante was already building there, and it’s also a fairly high-end market, where, as he noted, clients are more willing to weather higher interest rates. “So part of that was a hedge against the economy; you don’t see the deep swings in demand you would see in the Western Mass. market.”

A worker from Fontaine Brothers works on the facade of the former Court Square Hotel.
Photo by Joe Santa Maria, Kill the Ball Media

Fontaine said his company, while also expanding its reach geographically, is taking on more housing work now that it’s starting to become a priority again. “We did a lot of it for a long time, and we’re seeing a lot more public housing, affordable housing, make its way back through the funding pipeline.”

His most notable current project in that realm is the ongoing transformation, with Winn Development, of the Court Square Hotel in Springfield into 71 units of market-rate housing, accompanied by retail on the ground floor.

Fontaine’s longtime presence in the education sector is also strong right now, with projects including the new DeBerry-Swan Elementary School in Springfield, an elementary school in Tyngsborough, a middle school in Walpole, a project at UMass Chan Medical School in Worcester, and the $240 million Doherty Memorial High School, the largest project in the city of Worcester’s history.

Help Wanted

After inflation and supply woes, the third challenge construction companies are dealing with remains a workforce crunch, which has affected many other sectors of the economy as well.

“The number of people going into the trades is way, way down,” Laplante said. “There’s got to be more emphasis put on job training and vocational schools. The opportunities out there for tradespeople, and what a skilled tradesperson can make, are incredible.”

To that end, he works directly with area vocational schools to cultivate talent, and often schools that aren’t vocational, per se, but have vocational programs. For example, an intern from Longmeadow High School will come on board soon, and Laplante hired another intern from that school last year.

“Through COVID, we’ve had people who have been borderline on retirement, and COVID pushed them to retire,” Fontaine said of one of the stress points in the construction workforce. “But we honestly haven’t had as significant labor challenges as some of our peers.”

That’s partly due to working with some of the large local unions, which can supply a more reliable workforce, he said. “But we’ve also put a lot of focus the last few years into workforce development, even before COVID. We actively go into the community and work with workforce programs, with community organizations, to bring people into the workforce.”

Those efforts are crucial, he added. “When I look at the next 20 to 30 years, that’s one of the biggest challenges, to be able to recruit people into the trades.”

Fontaine added that his company has been able to integrate a lot of technology into projects over the last few years, which has helped overcome challenges related to cost, lead times, and workforce. “We’re using technology to track lead times and inform other projects, so we avoid those ‘gotcha’ moments, and we’re using technology to coordinate mechanical systems and prefabricate them off-site, which helps with some of that labor and lead-time burden.”

In short, he said, “we’re trying to modernize an industry that’s by nature not modern, to the best extent possible. That’s been a big theme for us the last couple years.”

That said, the main theme across the industry in 2023 could be the impact of those rising interest rates finally coming to roost.

“Our planning process is so long, and the jobs we’re getting ready to start now are jobs that were planned four months ago, and when the financing is finally put together, we’re ready to get shovels in the ground. That’s a house that people ultimately will be moving into in the fall,” Laplante explained. “So, because of that, we see a little more of a lag in the drop in demand based on the interest rates, but it certainly is coming.”

Still, Dodge’s Branch believes any downturn in the construction industry will not be as dire as the Great Recession, which settled over the U.S. almost 15 years ago.

“The funds provided to the construction industry through the Infrastructure Investment and Jobs Act, the CHIPS and Science Act, and the Inflation Reduction Act will counter the downturn, allowing the construction industry to tread water,” he said. “During the Great Recession, there was no place to find solace in construction activity — 2023 will be quite different.”

Joseph Bednar can be reached at [email protected]

U.S. Construction Industry Lags Due to Global Labor Shortage

By BusinessWest Staff September 16, 2022

Construction

Survey Says

Construction’s skilled-labor shortage is a well-known and serious concern for the U.S. construction sector, but the extent of the problem shows issues that need to be resolved right away if the country is to satisfy rising construction demand.

Associated General Contractors of America (AGC) and Autodesk conducted a workforce survey, and the results show that 93% of construction companies report having positions available they are trying to fill, and 91% of those firms are having trouble trying to fill at least some of those positions, especially among the craft workforce that accomplishes the majority of on-site construction activities.

According to Ken Simonson, chief economist at AGC, the most common rationale for problems filling positions, mentioned by 77% of employers, is that available individuals lack the skills required to work in construction or cannot take a drug test.

According to the national employment figures, the construction sector’s unemployment rate as of July was actually slightly lower than that of other sectors, he added. That’s remarkable in a sector where workers aren’t always kept on the payroll once a project is completed. With a 3.5% rate, virtually no one with prior construction expertise is actively seeking employment in the industry.

However, a panel of construction professionals in a webinar hosted by AGC said the industry needs to attack the issue from every perspective, which includes education and training, public relations, and things as simple as employers improving wages, perks, and labor standards. The survey results highlight the need for public officials to invest in new workforce-development programs focused on the construction industry.

According to Simonson, federal, state, and local officials must invest in the kinds of professional and technical education programs that will introduce more current and future employees to the myriad job possibilities that exist in construction. Additionally, these programs offer the kind of fundamental capabilities employers are looking for.

On a completely separate note, Simonson proposed that, in order to help cover demand gaps, federal officials could also take action to permit more workers to legally enter the nation. Later in the online conversation, the panelists discussed how to spread the word about the advantages of a career in construction to other undiscovered labor pools, including those in the retail and hospitality industries.

The panelists also talked about considering those who have served time in prison as job seekers because many of them are trying to better their lives but haven’t had much luck finding work.

Regardless of potential remedies, the existing shortages will undoubtedly hinder the completion of projects.

Construction enterprises of all shapes, sizes, and labor arrangements are suffering from a serious scarcity of laborers, according to Simonson. These labour shortages are making it harder for businesses to deal with supply-chain risks that are driving up building material costs and causing uncertainty in delivery times and product availability.

Indeed, 82% of businesses claim that projects they are working on have been delayed due to supply-chain issues, and six in ten state that projects have been delayed due to manpower shortages. The federal government’s new infrastructure spending and more recent expenditures on semiconductor manufacturers and energy-infrastructure projects won’t deliver as much as promised if there aren’t enough people to keep up with demand, Simonson cautioned.

The findings indicate that all kinds of businesses are facing the same difficulties. Contractors working on building projects, highway and transportation initiatives, federal and heavy work, or utility infrastructure reported results that have been remarkably similar, whether they used only union craft labor or open-shop employers, contractors with annual revenues of $50 million or less, or those with more than $500 million.

Construction is becoming more expensive as a result of labor shortages and supply-chain issues. In the past year, 86% of businesses increased the basic pay rates for their employees, while 70% passed on higher material costs to project owners.

Some project owners have canceled or delayed projects due to cost and supply-chain issues; according to 58% of respondents, owners have done so due to rising costs, while one-third of enterprises say projects have been affected by extended or unknown completion deadlines.

Many construction companies claim to be taking action to address the labor shortage. Along with the fact that most companies have increased pay rates, 45% of them are now offering incentives and bonuses, and 24% of them have also upgraded their benefit packages.

Technology is a key factor in how well businesses are able to deal with difficulties like labor shortages. In fact, 87% of businesses agree that, in order to enable new technologies to succeed, staff must be proficient in digital technology. Even if few candidates have the necessary construction abilities, at least half of the responding businesses claim that the individuals they are employing have the necessary technology skills.

While the majority of construction companies are now having trouble filling vacant positions with qualified candidates, Allison Scott, director of Customer Experience and Industry Advocacy at Autodesk, noted that, as more workers retire, the labor crisis will only worsen. What’s promising is that construction companies understand this and are proactively training young people for careers in the industry.

She added that the industry is committed to taking action to build the next generation of the workforce, as seen by the increased efforts in career development and training programs, as well as an emphasis on digital skills.

The AGC is urging officials at the federal, state, and local levels to support career and technical education initiatives that will introduce more current and future workers to the diverse career options in the construction industry. In order to help bridge demand gaps until the domestic channel for training personnel is established, the group is also pleading with federal officials to permit additional workers to legally enter the country.

There is a lot of work for the business to undertake, but there aren’t enough workers or resources to finish the projects, according to Simonson. The construction industry will be able to rebuild America’s infrastructure, modernize its manufacturing sector, and contribute to the delivery of a more dependable and cleaner energy grid by addressing labor shortages and supply-chain issues. u

This article first appeared in World Construction Today.

Nationally, Construction Industry Prepares for Another Busy Year

By Contributor December 8, 2021

Construction

Continued Momentum

The engineering and construction industry has made a significant recovery from the 2020 recession, but it has also experienced multiple headwinds that are expected to persist. According to a report by Deloitte, 2022 should be another rewarding — but challenging — year, and the industry looks to be poised to capture growth opportunities.

The 2020 recession was among the shortest ever, but its impact continues to be observed across both the larger U.S. economy and the engineering and construction (E&C) industry.

In 2022, as we move into the second year of recovery, the industry has a big role in supporting the nation’s growth plan. The Infrastructure Investment and Jobs Act (IIJA), with investments across healthcare, public safety, and other public infrastructure, is expected to bode well for E&C firms and is likely to accelerate recovery across the non-residential segment. The residential segment is expected to stay strong and exhibit similar activity as it did in 2021.

“The 2020 recession was among the shortest ever, but its impact continues to be observed across both the larger U.S. economy and the engineering and construction industry.”

The industry has increased its investments in digital, including through mergers and acquisitions (M&A), as it prepares to shift toward connected construction capabilities. These technologies can help E&C firms support initiatives such as smart cities, urban air mobility, and climate-change programs, while helping to enhance internal operational efficiencies, reduce costs, and improve margins. Thus, 2022 is likely to be an exciting year for the engineering and construction industry, and Deloitte’s annual outlook explores five key themes to watch closely.

1. Several factors position the industry for strong growth amid the headwinds. The industry responded very well during the pandemic and has come out strong in the recovery period. Total construction spending recovered and peaked at $1.57 trillion in July 2021, 12% higher than 2019 average levels. In a recent survey, 91% of E&C respondents characterize the business outlook for their industry as somewhat or very positive, 23% higher than last year. Driving this business confidence is the expected strong performance of the residential segment and growth from the non-residential segment due to the $1 trillion IIJA.

Looking into the two segments in more detail, residential activities continued to stay strong despite rising material prices and the spread of the coronavirus Delta variant. In contrast, non-residential segment spending growth remained weak for much of 2021. Spending across educational, office, transportation, healthcare, and commercial facilities observed the largest year-over-year decline in July 2021.

2. Supply-chain disruption and sourcing challenges will likely affect project delivery and margins. During the second half of 2020, the pandemic exposed the vulnerabilities of global supply chains. Supply issues were expected to stabilize moving into 2021 as both global production resumed and supplies normalized. However, pandemic-induced supply shortages persist, affecting key materials such as lumber, paint and coatings, aluminum, steel, and cement, among others.

The impact of this crisis is twofold. The first challenge is the lack of materials; per an Associated General Contractors of America (AGC) survey, 75% of E&C firms indicated project delays due to longer lead times or shortage of materials. Furthermore, 57% reported delivery delays, indicating that the industry has difficulty predicting when materials would arrive.

The second impact is sharply increased costs; during the first seven months of 2021, the prices of critical construction materials observed double-digit increases every month. Overall, supply-chain disruptions and volatility are expected to be among the biggest challenges in 2022, and the firms that can navigate through them will likely emerge as winners.

3. Connected construction will help the industry unlock new value streams. The industry landscape is rapidly evolving as engineering firms, contractors, and participants across the value chain realize the benefits of, and increasingly deploy, connected construction technologies. These technologies can help bring assets, people, processes, and job sites onto one platform, making everyone work smarter, reduce downtime, optimize asset utilization and efficiency, and gain greater visibility into operations.

At the core of connected construction are emerging technologies and the data and advanced analytics that these new capabilities can enable. As the industry moves toward connected construction, developing data, analytics, and user-based insights capabilities could be critical. In 2022, connected construction will likely be a catch-all for major digital investments to connect, integrate, and automate operations and bring the entire value chain onto a secure, intelligent infrastructure.

4. M&A will help build broad-based capabilities. In 2020, most E&C firms were focused on being risk-averse and conserving cash to maintain liquidity. However, 2021 provides a stark contrast, as transaction levels for the first nine months were already 152% higher than the full year 2020 and 10% higher than all activity in 2019. The U.S. E&C industry ramped up M&A activity, registering $16 billion in deal value, during the first eight months of 2021. At this pace, the industry is likely to exceed the $20 billion deal value mark by the end of the year.

E&C companies have also shown renewed interest in technology and telecom targets to gain faster access to new digital capabilities and solutions. Between August 2020 and August 2021, U.S. E&C firms acquired as many as 27 targets across the software, electronics, technology consulting and services, and motion-picture fields. A move in the right direction, this is further anticipated to pick up pace in 2022 as E&C firms work toward acquiring technologies to help develop a connected, integrated, and automated operations foundation.

5. Firms will continue to grapple with labor shortages as the workforce landscape evolves. Emerging from the pandemic, the biggest question on the minds of most E&C firms was how to restart work at job sites safely. Surprisingly, while the industry quickly implemented the required safety standards, it is still trying to overcome the challenge of attracting workers. The impact of not filling job openings can negatively affect E&C firms in more ways than one, including project delays and cancellations, projects being scaled back, inability to respond to market needs, losing project bids, and failing to innovate, among others.

Another factor compounding labor shortages is a lack of qualified candidates. This skills gap is partly driven by industry advances into integrating digital technologies with key workstreams to further enhance productivity, efficiency, and worker safety. As we move into 2022, adapting existing talent strategies and forming new talent-management and workforce-experience strategies could be critical to navigating workforce challenges.

Price Hikes, Supply Shortages Challenge Construction Industry

By Contributor June 9, 2021

Construction Special Coverage

Framing the Issue

Few industries have been immune to the supply shortages and rising costs that have plagued the world economy over the past few months, but construction is especially vulnerable, relying heavily on materials — most notably lumber and steel, but dozens more as well — riddled by soaring prices. The good news is that demand for work is high, but many still worry about the long-term implications of a cost problem with no end in sight.

By Mark Morris

Early in 2020, several lumber mills and steel plants expected demand for their products to take a nosedive once the pandemic hit, so they slowed down or closed some of their operating plants. Instead, after only a brief hiatus in March, home and commercial construction resumed — and then significantly increased.

For Bob Boilard, vice president of Boilard Lumber, the decreased supply of lumber and growing demand have created multiple challenges. Orders for lumber that once took a week for delivery now have vague timetables and constantly changing prices.

“Pricing right now is set at the time of shipment, so we don’t know exactly what it’s going to cost us until it’s on the back of a truck,” Boilard said.

Because lumber prices change so often, Boilard and dealers like him study the commodity market every day to make sure they stay current. At press time, an eight-foot 2-by-4, used primarily to frame houses and certain commercial buildings, had increased to $11, up from $4 several months ago, a price hike of 175%.

Nick Riley says shortages are nothing new in construction, but so many types of materials being in short supply at one time is very uncommon.

Construction professionals have called this an unprecedented time. Price hikes and shortages of certain building materials are nothing new to the construction industry, but no one has seen inflation and scarcity of so many supplies that go into building a house or a business.

BusinessWest spoke with several construction managers who said we are currently in a perfect storm of greatly increased demand, COVID-related manufacturing slowdowns, and, literally, storms.

For instance, back in February, ice storms knocked out the power grid in Texas, shutting down several resin plants there and in neighboring Louisiana for several weeks. The resins from these plants are used in a broad range of building products, from adhesives to make plywood to the plastic that insulates electric cables. The resins are also used in many paints and primers.

“This is the first time I’ve seen drastic increases and shortages affect this many products. In the past, we’ve seen oil prices drive up the cost of roofing shingles, but never across the board with nearly every building material.”

Dan Bradbury, director of Sales and Marketing for Associated Builders, said the commodity price he follows closely is cold rolled steel. Most of the structures his company builds are pre-engineered metal buildings for commercial and industrial use.

“Cold rolled steel prices have increased 225% since last August,” Bradbury said. Due to shortages in getting the steel, he tells customers the building they order today will be delivered in about 20 weeks. Before COVID-19, that same project would take 10 to 12 weeks.

Increases and shortages don’t end with commodities, but also affect other materials involved in construction. Craig Sweitzer, co-owner of Sweitzer Construction, said an electrical contractor told him about the price instability of a heavy-duty cable used in commercial applications.

“His supplier would only hold the price for one day,” Sweitzer said. “Usually, our material prices are good for 15 days, so we’re not used to seeing this.”

What makes this time different is the broad array of materials impacted, said Nick Riley, owner of N. Riley Construction.

The price of a basic 2-by-4 has risen by 175% in recent months.

“This is the first time I’ve seen drastic increases and shortages affect this many products,” he noted. “In the past, we’ve seen oil prices drive up the cost of roofing shingles, but never across the board with nearly every building material.”

As someone who builds medical and dental offices, Sweitzer uses steel studs in place of 2-by-4 wood studs for interior wall partitions. At one time, the two products were close in price. While prices for both have increased, a steel stud is now far less expensive than wood.

“While the price of a steel stud has increased about 30%, it’s well below the double and triple price hikes we’ve seen with wood,” he said, adding that he’s also experienced shortages in random materials such as joint compound to finish walls, acoustical insulation, and interior doors. “There’s a particular style of door we use that once took a week to get. Now it can take eight weeks, and the price has increased.”

Steady On

Despite shortages and price hikes, the construction managers we spoke with are all grateful to have plenty of work scheduled.

“I’m fortunate to be busy, and at the same time, it’s incredibly stressful to keep everyone happy and meet deadlines,” Riley said. “It’s a crazy time right now.”

To manage some of that craziness, he has invested in a new tool, a CRM (customer relationship management) system.

“Through our system, we can keep everyone on the same page, and it allows customers to check in on their project,” Riley said. “By staying in closer contact with our customers, they’ll know immediately about any issues that might slow down a project.”

Managing expectations becomes essential when prices and timelines are uncertain. When someone wants a fast turnaround on a project, Bradbury gives them straight talk. “We’re honest and upfront with our customers as to what’s realistic,” he said.

Some customers have chosen to delay their projects, anticipating that prices may come down. Bradbury said that may work for some, but when a company needs a building to grow their business, they can’t always wait it out.

“My advice is to build it sooner rather than later because we are more likely to see further price increases,” he said. “Also, with lead times so long, the sooner you get in the queue for your project, the better off you’ll be.”

Beyond materials, shortages have also extended to the human element. Riley said finding laborers for home building has always been challenging, and the increased demand for new homes only exacerbates an already-tough situation.

One of the thorniest challenges to solving supply shortages, Boilard noted, involves finding truckers to move the goods. “You can’t get drivers to get behind the wheel of a tractor-trailer. There are lots of trucking jobs open right now, but few people to fill them.”

Construction workers were deemed essential during the pandemic, so their time off the job was brief. Bradbury said the short shutdown allowed his company to retain most of its workers. “Some of our subcontractors have felt labor shortages, but we are grateful that has not had a significant impact on our business.”

When COVID first hit, Sweitzer gave all his employees a raise to make sure they were compensated well enough to stay with his company. “We’ve been lucky because we have an extremely good and loyal crew. I’ve found that good labor is worth the investment.”

Looking Ahead

Predictions on when prices and supplies might stabilize is anyone’s guess. Boilard explained that his company determines its lumber-buying needs early in the year, which these days is a real challenge. If a dealer stocks up heavily now only to see prices eventually crash, they are stuck with expensive inventory in a market that no longer supports those higher prices.

This building under construction shows how much cold rolled steel Associated Builders uses in a project.

“It’s not a fun time because we have to do a balancing act of meeting our customers’ needs without having too much inventory on hand,” he said.

Riley has seen conflicting predictions about lumber prices dropping either at the end of 2021 or sometime in 2022. He’s seen lumber and electrical wire come down before, but he’s more concerned about other materials that go into building a house.

“In my years in business, when windows, siding, and roofing shingles increase in price, I’ve never seen them come back down,” he said. “I think increases like that are here to stay.”

Bradbury said he can’t predict what will happen in his industry, but he hopes to see the supply of steel catch up to demand by the end of this year. “My best guess is supply will get better and lead times will improve before we see prices start to stabilize.”

Sweitzer noted that he has a degree in management, while his two sons have degrees in economics and business administration, so they often discuss what may lie ahead. And their conversations have been optimistic.

“Markets always find some level of equilibrium, and I believe that will happen in this market,” he said. “Market equilibrium may take a temporary vacation, but it has always returned, and I think it will again.”

Construction Job Openings Flat in November

Construction Industry Navigates One Challenge After Another