State of the Construction Industry: January 2019 Roundup
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We’re one month into 2019 and already there are some big stories making waves across the United States — from the government shutdown and battle over a potential border wall to the impacts from tariffs and concerns of a slowing economy. In construction, however, signs point to at least one more big year, with a rush of infrastructure projects getting rolled out, new technologies showing positive impacts and new ideas to overcome labor shortages.
Big Projects Permeating Construction Landscape
Though multiple economic outlooks and construction industry reports show new project growth rates slowing slightly in 2019, the outlook is still strong for the next few years. And a spattering of recent news stories back this up. In New York, Gov. Andrew Cuomo proposed a $150 billion, five-year infrastructure plan for transportation and mass transit projects, park facilities and expanding the use of design-build and other alternate project delivery methods. In Chicago, officials are mulling over several design plans for an $8.5 billion expansion of O’Hare International Airport to modernize the facility. The Memphis, Tenn. Region saw $1.3 billion in new construction permits issuedin 2018, while in-state neighbor Nashville currently has 18 projects underway valued at $100 million or more, including two $1 billion projects. The Arkansas Department of Transportation also just opened $142 million worth of transportation projects up to bids.
The takeaway: Despite political and socioeconomic uncertainty, there is still a significant appetite to get infrastructure and new building projects moving. We predict we’ll see a significant number of new projects getting announced in the coming months. The business is there, and contractors could be in line for big bottom lines in 2019 and 2020. Though they still need to find the skilled labor to handle the workloads, which leads us to:
Contractors Focused on Labor Strategies and Programs for Year Ahead
Stephen Sandherr, CEO of the Associated General Contractors of America (AGC), recently announced a new program to diversify the construction workforce. The program aims to recruit a more diverse pool of construction workers by implementing vocational training that targets women and minority high school students around the United States. Some say that’s not enough as critics argue that contractors should be encouraged or even required to partner with minority- and women-owned businesses for projects, not just hiring them as subcontractors. Meanwhile, while targeting Millennials has been an ongoing recruitment challenge for contractors, many firms are turning their attention to the next Generation, Z(born between 1995 and 2010, or ages 9 to 24). With student loans for four-year colleges and universities rivalling mortgage debt in the United States, trade programs, apprenticeships and two-year colleges or construction courses are being touted as a way for younger and future professionals to carve out successful careers.
The takeaway: Recruiting talent in the construction industry has been an ongoing challenge for years now. It’s great to see contractors and construction organizations putting together resources to attracting younger talent, but there also needs to be a full-circle approach that not only prioritizes recruiting, but retaining the younger workers — especially with another possible recession on the way. Thankfully, many contractors are putting strategies in place, implementing technologies that appeal to younger workers, bucking traditional workforce trends to provide long-standing career paths and more.
New Federal Rule, Significant Achievement Could Expand Drone Use in Construction
The U.S. Department of Transportation and Federal Aviation Administration have proposed and will test a new regulation that, if approved, would allow drone operators to fly at night and over humans without first obtaining a waiver. The move would take the red tape and delays in obtaining waivers out of the mix, allowing drone users to conduct business with drones faster and easier. Meanwhile, a significant milestone in drones’ application for infrastructure and construction projects. Infrastructure contractor Black & Veatch in December announced the successful test of a 60-mile, nonstop drone-based inspection flightconducted by a remote pilot located miles away in a command center in Illinois. The proof-of-concept flight included a twisting, 23-mile stretch of electrical transmission lines.
The takeaway: These are both significant developments for drone usage in construction. First, with regard to the inspection test flight, it shows that the applications are endless and could save countless labor and equipment hours for contractors in the field — especially when dealing with remote or challenging locations. This is yet another way technology is helping construction projects move faster and more efficiently. Secondly, with limiting rules and regulations being relaxed, there is less red tape for contractors to fight through, and more incentive for contractors that aren’t using drones to get into the game.
Innovative Building Material Being Touted in Wake of Disastrous Calif. Wildfires
A recent article on CNBC.com talks about the benefits of a new building material that, while not widely used in the United States, is being eyed as a possible replacement of wood structures in the wake of 2018’s disastrous wildfires. The material, known as 3D cementitious sandwich panel utilizes a concrete exterior and an interior that is not combustible. Several contractors are starting to use the panels in rebuilding homes and businesses destroyed by the fires and the city of Santa Rosa, Calif. is using the panels to rebuild a firewall recently destroyed by fire. One company, RSG 3-D, is preparing to bring the panels to the United States for mass production and expects them to have at least two-hour fire ratings, meaning open flames could be applied to the walls for two hours or more with no combustion.
The takeaway: While wood structures and building practices are seeing somewhat of a comeback with new innovations, having new, more resistant materials to work with only adds to the integrity of construction projects. And with the cost of materials like steel being subjected to high costs from tariffs and high demands, there may be a point soon where newer, more experimental building materials could also become cost effective as well.