Coronavirus Impacts the Industry
During a time when people are encouraged to be extra attentive to hand washing, the hands-on construction industry is facing many challenges and an uncertain future. While the severity of the impact of COVID-19 is still unknown, experts now predict the pandemic will pack a punch. Here are some of the ramifications.
Cancellations and postponements
As numerous cities across the country recommend limiting mass gatherings to smaller groups, these declarations severely impact union meetings, conferences, trade shows and other events. This includes an early closure to North America’s largest construction trade show, CONEXPO-CON/AGG. Thus far, North America’s Building Trades Unions (NABTU) 2020 Conference is canceled, The Associated Builders and Contractors Convention is rescheduled, International Mass Timber Conference is postponed, and the AIA Conference on Architecture is postponed.
Employee health and safety
According to Occupational Safety and Health Administration (OSHA), transmission of COVID-19 is low for people working in industries other than healthcare.
In response to “many questions around how businesses should be handling potential cases among employees,” Associated General Contractors (AGC) provides guidance on exposure and the California Chapter has worked with Cal-OSHA partners to obtain clear information and protocols around processes that employers need to be aware of when employees contract COVID–19. Resources provide guidance on steps to take to reduce the risk of exposure.
While the focus has been on physical health, mental health and coping with fear and anxiety due to the pandemic is an issue the CDC is also addressing. The World Health Organization (WHO) issued guidelines for protecting mental health during the outbreak.
With the industry already impacted by a shortage of skilled labor, further challenges may arise if mandated quarantines create containment areas or if public transportation ceases making it difficult (or impossible) for employees to get to worksites.
Lack of materials
The U.S. construction industry has long relied on imported building materials including steel, stone, and fixtures that come from Asia and, more specifically, China, where the coronavirus was first detected. Chinese government containment efforts and quarantines have slowed or shut down factories in dozens of the country’s cities and provinces.
With production halted, the supply chain is greatly interrupted. Additionally, some items have not been able to get to the U.S. due to closure of some ports. This is likely to lead to a lack of materials, a delay in shipments, and higher material costs.
The cost of materials had already been rising before COVID-19. Experts now say developers can expect the trend to continue.
Fewer materials and rising costs may very well translate into potentially slower project completions and delays that could put contractors in default of contracts. Experts say that unfortunately, while this pandemic was unforeseeable, contractors may still be contractually responsible for delays or cost overruns on projects.
Before COVID-19, a majority of economists were predicting another recession to hit sometime in 2020 and urged construction firms to take steps to “recession proof” their businesses. Anirban Basu, chairman and CEO of Sage Policy Group and chief economist of the Associated Builders and Contractors, now says, “The risk of recession over the next three to six months is arguably more elevated than at any period since 2007.” JPMorgan officially forecasts a coronavirus-driven recession will rock the U.S. and Europe by July.
How big the impact is going to be and how long it will last remains two of the many unknowns surrounding COVID-19. Nonetheless, it is imperative for the construction industry to prepare for impact.
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