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State of the Construction Industry: March 2019 Roundup
It’s March Madness and as the competition heats up on the courts, so too is work heating up for contractors. But just how much work will there be in the near future? Some key opportunities could be shelved, a recession could be looming and the skilled labor shortage continues to have real impacts on the construction industry. Here’s a look at just a few of the most interesting stories in March:
Federal Construction Funds Targeted for Cuts in Proposed Budget
President Trump’s $4.7 trillion fiscal year 2020 budget proposal featured some significant cutbacks in federal construction spending. Among the cuts, no funds allocated to new construction for the Army Corps of Engineers, a 22 percent decrease in U.S. Department of Transportation discretionary spending, and just $1.6 billion allocated for the Department of Veteran Affairs major and minor construction program. One area where funding us up is with the U.S. Department of Defense, where a 5-percent increase would include $9.2 billion in funds for “unspecified construction for emergencies.” Proposed cuts to many federal programs are being proposed as Trump continues to look for ways to fund a wall along the U.S.-Mexico border. Meanwhile, in the United Kingdom, the continually changing Brexit plans have contractors there on edge as they weigh the possibility of reduced market opportunities and government contracts.
The Takeaway: While none of these cuts are set in stone as Congress will have a hand in deciding the ultimate outcome of the various construction funding measures, the idea of any cuts in construction funding can certainly give the industry some pause. Especially with contractors that rely on federal projects, it could signal a downturn in work. And with worries over a pending recession, it might be time for contractors to modernize and improve their own internal processes to gain competitive edges — and be prepared to take on more work when new opportunities are plentiful again.
The New Economic Metric: Construction Cranes
Construction consulting firm Rider Levett Bucknall has created a new way to measure cities’ economic health with its RLB Crane Index. The index, as it exists now, is a tally of construction cranes in 13 major North American cities and is used to provide an economic snapshot of the cities’ economic health. Essentially, the more cranes, the better the city’s economy. Though that a simple take, the index was created for clients to help ascertain hiring trends and construction activity in urban markets. If there is more work being done, then the already stressed skilled labor pool may tighten even more and builders could wind up slowing down or delaying projects to ensure quality and safety.
The Takeaway: While it seems simple, and we’ve all probably thought at one point or another: “look at all of these cranes…business must be booming here,” the idea of a crane index for economic health is a great idea for an economic metric. It also underscores that there are still plenty of opportunities for commercial construction at the moment, but that more needs to be done about getting skilled workers back in the game and/or finding new ways to automate work that needs to be done.
Labor Shortage Causing Contractors to Miss Deadlines
Speaking of the labor issue, the Q1 2019 Commercial Construction Index revealed that 70 percent of contractors are struggling to meet project deadlines thanks to a shortage of skilled workers. The report notes that there is “a widely-held perception that construction jobs are ‘dirty’ jobs rather than careers that require training … As commercial construction continues to grapple with labor shortages, this disjointed perception of what it is like to work in construction appears to be exacerbating the problem.” The report noted that contractors felt higher pay, a clear path for advancement and good benefits would attract the right workers. But nearly one-third of contractors also recognize that the ability to work with advanced technology is a lure for younger generations of professionals.
The Takeaway: This underscores what technology advocates have been stressing for years now. The construction industry — even before advances like cloud computing, mobile smart devices, artificial intelligence, drones and more — has long fought a perception issue as a sort of “dinosaur” industry where career advancement is limited. Though that narrative IS changing, much more needs to be done to show younger generations that construction and technology go hand-in-hand. More contractors need to adopt these new technologies into their operations and modernize the software programs used to run their organizations. Do so and skilled workers won’t see inefficiencies and headaches, they’ll see opportunities.
Autonomous Robots Poised to Boost Construction Productivity
A new study by Science Robotics notes that the idea of large structures being collaboratively built by teams of smaller, autonomous robots is a concept that is gaining significant momentum in robotics research. Called Collective Robotic Construction (CRC), the concept would see several multi-robot systems designed to modify a shared environment as defined by user-specific plans or goals. The study notes that CRC would solve critical construction industry needs for safe, inexpensive, sustainable and automated construction processes, noting the construction industry has already started down this path with prefabrication and other robot-assisted construction technologies like drones.
The Takeaway: There is indeed a significant need for more automated processes and technologies in the construction industry, AND this kind of advancement could both shift the narrative of construction lagging behind other industries in technology adoption and solve the skilled labor shortage. On the latter point, robotics could reduce headcount needs in the field (and potential safety incidents from dangerous tasks), while creating new opportunities for robotic engineering, project planning and tech-aided execution roles in construction — positions that could certainly appeal to younger generations of professionals that are rooted in, and looking to work with, the latest technologies.
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