Building and construction represent one of the pillars of American economy: infrastructure. The growth of this sector correlates with the expansion of the economy; stagnation tends to portend problems with recession or inflation. In the wake of the pandemic, all eyes are on the construction industry as a signal for the country’s recovery and growth beyond.
Unfortunately, catalysts from the pandemic continue to hamper the construction industry. Industry executives face challenges they haven’t seen in more than a decade, since the Great Recession in 2008. Materials costs are on the rise, demand is rising in tandem, and labor and availability appear to run on a parallel downtrend. It’s a recipe for hardship not only for the construction industry, but the American economy at large.
Construction headwinds blow strong
Construction companies are desperately seeking stalwart leadership to help them prepare for challenges (and opportunities ahead). Builders need to adapt aggressive strategies for shoring up their balance sheets headed into turbulent times, while also pivoting to capitalize on opportunities that are a direct result of the pandemic.
Perhaps the biggest challenge construction firms face is the rising cost of materials. Virtually every raw material is either in short supply or priced at a premium due to demand. As a result, it’s getting more and more difficult for builders to obtain the materials they need to keep builds on-time and under-budget—if they’re able to source them at all. According to executive sentiments in the May 2021 ISM® Report On Business®:
“One of the biggest concerns now is shortages of crucial material and equipment. Metal coils for production are especially scarce. Equipment and material suppliers have been raising prices since the first of the year. We hear of a new increase almost daily.”
There’s emphasis on reworking supply chains and stockpiling when possible to offset rising costs, but many builders also face another unique problem: lack of talent. Employment is down across the board in construction, according to the May 2021 ISM® Report On Business®. Six-month figures show a yo-yo effect, with employment gaining and falling in a generally downward trajectory.
As construction companies struggle to meet demand and do so with adequate margins, they’re turning their attention to leadership with a vision for the future to help them cope with the crunch now.
Visionary leaders see opportunities
Seasoned building and construction executives aren’t blind to the problems blanketing the industry; however, their attention is on opportunities. As the industry braces for headwinds, savvy executives will find ways to bring in new contracts and build out the project pipeline to weather them in the immediate and beyond.
The biggest opportunity rests with the pending American Jobs Plan. The beleaguered bill currently faces partisanship hurdles in congress, but represents a once-in-a-generation opportunity for infrastructure improvements. The original scope of the bill lays out more than $2 trillion in construction improvements, spanning utilities, energy, housing, transportation and more. It’s set to be a boon for builders across the sector.
Visionary construction executives are also looking at technologies of the future as investments for more sustainable and strategic building opportunities. Using BIM and GIS data, for example, opens the door to lucrative commercial contracts from customers that demand this data as part of a day-one digital twin. Moreover, everything from drone surveying to AR/VR technology in the field can help builders become more efficient and informed.
Cost and labor challenges are an immediate threat to builders, but executives need to look at solutions that supersede the immediacy of these headwinds. Investment in new technologies, offset by pursuit of high-value contracts, will position construction companies for long-term success that trumps immediate struggles.
Building the future starts with leadership
It’s also important to understand how leadership can attract and retain talent. Construction is an industry of artisans—framers, masons, foundation experts, carpenters, electricians, plumbers, etc. Most are subcontracted for jobs based on experienced and network. Leadership plays a pivotal role in building out a firm’s access to craftspeople and artisans.
A tenured leader will have contacts and experiences that immediately benefit their company and the projects within their pipeline. No more going to the market to reverse bid on contract professionals with no prior experience. Instead, leaders bring with them a network of tried, true and trusted vendors, contractors and suppliers, each contributing to more efficient operations—and often, more cost-effective results.
As American prepares to build back better and build big for a new generation to come, construction companies need to start thinking about hiring leadership that shares this vision. As pundits measure the growth of the economy by new infrastructure and housing projects, construction companies can measure their own success by the number of builds they contribute to it.