One year after the pandemic struck, construction firms are experiencing soaring materials costs, widespread supply-chain problems, and continuing project deferrals and cancellations, according to a new survey that the Associated General Contractors of America released today. Association officials urged Congress and the Biden administration to take steps to eliminate tariffs on key materials, address shipping backups and boost funding for new infrastructure to help the industry recovery.
“The survey results make it clear that the construction industry faces a variety of challenges that threaten to leave many firms and workers behind, even as some parts of the economy are recovering or even thriving,” said Ken Simonson, the association’s chief economist. “The pandemic has left the supply chain for a range of key construction components in tatters and undermined demand for a host of private-sector projects.”
Simonson noted that an overwhelming 93% of the survey’s respondents report the pandemic has driven up their costs. Four out of five are spending more on personal protective equipment, sanitizers, and other health-related expenses. More than half say that projects are taking longer than previously.
Costs and delayed deliveries of materials, parts, and supplies are vexing many contractors. Nearly 85% report those costs have increased over the past year. In addition, nearly three-fourths of the firms are currently experiencing project delays and disruptions, mainly due to shortages of materials, equipment or parts. Nine out of ten firms that are incurring such delays cite backlogs and shutdowns at domestic producers, such as factories, mills, and fabricators. Half of the firms also blame backlogs or shutdowns at foreign producers.
More than three-fourths of the firms report having projects canceled or postponed in the past year, including more than one out of five with a 2021 project that has been canceled or postponed. Meanwhile, only one-fifth of respondents say they have won new projects or add-ons to existing projects as a result of the pandemic.
In a sign that the pandemic has had very different effects on construction firms, about one-third of firms say business matches or exceeds year-ago levels, while another third say it will take more than six months to reach that mark, and one-fifth say they don’t know. Respondents in the Northeast are the most pessimistic about the outlook, followed by firms in the South. Firms from the Midwest are split along the same lines as the full survey, while respondents in the West are more optimistic, on balance.
Despite these differences in experience to date and the near-term outlook, contractors from all regions, project types, and firm sizes are almost equally bullish about their hiring expectations over the next 12 months. Across nearly all subgroups, roughly three out of five respondents expect to add employees over the coming 12 months. Only 10 to 15% of firms in any category expect to reduce their headcount.
“Contractors need Washington officials to cut tariffs and address the shipping and supply chain problems that are driving costs and contributing to project delays,” said Brian Turmail, the association’s spokesman. “They also expect the President will keep his word and get significant new infrastructure investments enacted as quickly as possible.”
View the survey results.
Related Stories
Market Data | Dec 13, 2022
Contractors' backlog of work reaches three-year high
U.S. construction firms have, on average, 9.2 months of work in the pipeline, according to ABC's latest Construction Backlog Indicator.
Contractors | Dec 6, 2022
Slow payments cost the construction industry $208 billion in 2022
The cost of floating payments for wages and invoices represents $208 billion in excess cost to the construction industry, a 53% increase from 2021, according to a survey by Rabbet, a provider of construction finance software.
Mass Timber | Dec 1, 2022
Cross laminated timber market forecast to more than triple by end of decade
Cross laminated timber (CLT) is gaining acceptance as an eco-friendly building material, a trend that will propel its growth through the end of the 2020s. The CLT market is projected to more than triple from $1.11 billion in 2021 to $3.72 billion by 2030, according to a report from Polaris Market Research.
Market Data | Nov 15, 2022
Construction demand will be a double-edged sword in 2023
Skanska’s latest forecast sees shorter lead times and receding inflation, but the industry isn’t out of the woods yet.
Reconstruction & Renovation | Nov 8, 2022
Renovation work outpaces new construction for first time in two decades
Renovations of older buildings in U.S. cities recently hit a record high as reflected in architecture firm billings, according to the American Institute of Architects (AIA).
Market Data | Nov 3, 2022
Building material prices have become the calm in America’s economic storm
Linesight’s latest quarterly report predicts stability (mostly) through the first half of 2023
Building Team | Nov 1, 2022
Nonresidential construction spending increases slightly in September, says ABC
National nonresidential construction spending was up by 0.5% in September, according to an Associated Builders and Contractors analysis of data published today by the U.S. Census Bureau.
Hotel Facilities | Oct 31, 2022
These three hoteliers make up two-thirds of all new hotel development in the U.S.
With a combined 3,523 projects and 400,490 rooms in the pipeline, Marriott, Hilton, and InterContinental dominate the U.S. hotel construction sector.
Codes and Standards | Oct 26, 2022
‘Landmark study’ offers key recommendations for design-build delivery
The ACEC Research Institute and the University of Colorado Boulder released what the White House called a “landmark study” on the design-build delivery method.
Building Team | Oct 26, 2022
The U.S. hotel construction pipeline shows positive growth year-over-year at Q3 2022 close
According to the third quarter Construction Pipeline Trend Report for the United States from Lodging Econometrics (LE), the U.S. construction pipeline stands at 5,317 projects/629,489 rooms, up 10% by projects and 6% rooms Year-Over-Year (YOY).