Q4 2019 Economic Indicators

COVID-19 And the US Construction Industry

Two things happened to me this week that changed my evening reading. First, a long-time peer group member of mine sent out an email that he had purchased-material stuck in US Shipping ports due to Coronavirus fears (he wanted to know if I was experiencing the same issue). Second, the virus has hit the US, with the first cases spreading along the west coast.

In early articles, I found that there are plenty of documented impacts of the decreased Chinese production and the related devastation to the global supply chains. The US and international companies have felt the effect in the automotive, technology, and airline industries. Most recent articles are starting to speculate on the pending impact on the construction industry.

One good article quoted Richard Branch, Chief Economist for Dodge Data & Analytics. He stated that, “the American construction industry will not be immune to the coronavirus’ impact. For commercial builders that rely on Chinese-made goods or materials, this could mean higher material costs and potentially slower project completions.”

By Branch’s estimate, “building product imports from China account for nearly 30% of all US building product imports, making China the largest single supplier to the US.”

Our industry is already facing labor shortages, and the related labor cost increases, as well as material price fluctuations from inflation and tariffs. COVID-19 is another threat to the industry that we will consider during project planning.

While Miles-McClellan has not experienced any of the above issues related to the virus, my friend’s phone call now makes sense. We intend to start discussing this issue internally and working with our clients to bring strategies where necessary.

Here are three quick strategies for all of our owners to consider:

  1. Lockdown bids for 60-90 days, giving a little more time for decision making at a set price.
  2. Consider diversifying the supplier base with an increase in priority on local goods and services.
  3. If using products from overseas, build-in a schedule and budget contingency for future unknowns.

Stautner, J. (2020, February 27). How the Coronavirus Could Impact the US Construction Industry. Retrieved from constructioncitizen.com: https://constructioncitizen.com/blog/how-coronavirus-could-impact-us-construction-industry/2002271