MANAGEMENT
By Tina Cauller
Change is the only Constant
Business agility and strategic preparedness will be essential for contractors in 2021 Shelby Erectors recently worked on the SW 1st Street Bridge project over the Miami River, noting that some transportation projects in 2020 were accelerated because of fewer people being on the roads. Commercial transportation projects also constitute the bulk of the company's current backlog.
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he disruptive effects of accelerating Covid-19 spread on the economy, the market, and the supply-chain have positioned a massive cloud of uncertainty between business leaders and their view of the future. While most see a rebound ahead, the timing and dimensions of a recovery depend on the type of business, leaving anxious business owners to consider where their company might land in a “K-shaped” recovery. Economic experts are forecasting a mixed outlook for the construction industry in 2021 Economic experts are forecasting a mixed outlook for the construction industry in 2021. We asked steel erection, decking, and rebar contractors to weigh in on the state of the construction market. They share insight into the sectors where they have backlog and what concerns them regarding the new Presidential Administration.
The Downside For anyone trying to plan their company’s future, uncertainty is an uncomfortable Tina Cauller is a graphic designer and freelance writer with 30 years of experience reporting for trade and technical publications in building construction and real estate markets. She can be reached at tinacauller@gmail.com
problem. Understanding the economic forces shaping the future of the construction industry requires looking closely at the uneven impact of the pandemic on our economy and the links between industries. Although state- and federally-funded projects that have been in the works for months, such as airport expansions and rapid transit projects, are proceeding as planned, uncertainty means that developers and lenders will shy away from risk-taking. In contrast, SEAA-member company, Shelby Erectors of Florida reports that transportation projects constitute the bulk of its current backlog. One change in particular is leading developers to shelve new commercial construction projects. The pandemic has driven workers out of Class A office space in favor of working remotely. Upwork reports an 87% increase in the number of Americans who now work from home. The remote workforce is likely here to stay, as employers and workers see measurable advantages in morale, cost, and productivity. One in four Americans will be working remotely in 2021 and, according to predictions, 22% of the U.S. workforce will still be working from a home office by 2025. This change has resulted in tightened lending for commercial real estate. The Associated Builders and Contractors backlog indicator, which reflects work under
16 | THE STEEL ERECTORS ASSOCIATION OF AMERICA
contract to be performed by commercial and industrial construction contractors in the months ahead, has shown an overall downward trend since January 2020. Contractors express concerns about what will happen to the project pipeline after this year’s backlog is exhausted, since so many new projects are being cancelled or put on hold by project owners. Even for those companies fortunate enough to have construction projects in the economy’s healthier sectors, new social distancing guidelines remain challenging and outbreaks of illness are causing project delays. For some industries, the effects of the pandemic have been devastating. Travel and associated industries, such as airline and hospitality, are among the hardest hit and are likely not to see a recovery anytime soon. The restaurant industry has been dealt a near-mortal blow. In states that rely heavily on tourism revenue, the decline has wiped out funding for new construction projects. Retail is staggering under the pressure of e-commerce as shoppers stay home, and retail starts are down by 30%. Healthcare starts are off by about half, impacted by worried Americans who put off medical visits and elective procedures. But, as more people are vaccinated and catch-up appointments begin to fill the scheduling calendars, a surge in healthcare construction is