News about construction, housing shortages, and buyers willing to pay over asking is rampant these days. There’s not enough inventory in many markets around the country, and homeowners are desperate for homes. Families are willing to pay over asking in competitive markets, driven partially by pent-up demand and low-interest rates.
Even some commercial building is seeing demand, including hospital construction after COVID surges have left healthcare staff desperate for rooms and beds.
It sounds like a time for construction, right?
Forbes indicates in 2021, “the Mortgage Bankers Association (MBA) forecasts single-family housing starts to be around 1.134 million. And that could just be the beginning, as projections going forward are even rosier: 1.165 million single-family homes in 2022 and 1.210 million in 2023.”
Although the construction industry is on the precipice of success, there are limiting factors. CNBC indicates, “Single-family housing starts dropped more than 13% in April compared with March, the U.S. Census reported Tuesday. That’s the sharpest decrease since last April when the pandemic shut down the economy.”
What’s happening? Lane Supply Company provides challenges and opportunities for each issue.
Spending money; saving money
Construction materials have become more expensive.
Lumber is so spendy that 15% of builders are adding a concrete foundation and waiting for lumber prices to decrease. But according to the National Association of Home Builders, it’s not just lumber that’s skyrocketing in costs – concrete, steel, appliances, adhesives, and more are all going up. In other words, virtually everything needed to make a house is growing more costly.
Although materials may not get cheaper for a while, there are ways to reduce overall costs. Businesses can always get more efficient, looking for ways to eliminate waste. One way to save money is to consolidate vendors, reducing the time needed by personnel to manage (and pay) multiple vendors.
Supply chain issues; vendor solutions
The supply chain has become jammed.
Due to COVID and a backlog of shipping, it’s harder than ever to get needed items for building. Dishwashers, freezers, ovens, and more are all tough to find and receive. Specialty items are even more difficult to locate.
What construction companies need now are vendors willing to leverage their connections to provide those needed resources. Some vendors, such as Lane Supply Company, can get price breaks based on long-term relationships with suppliers. They can also make recommendations on other products that are readily available or easier to purchase.
Builders can also rely more on vendors, such as Lane, who manage inventory and safety stock for clients. By ensuring needed abrasives, adhesives, tools, and more are available, you’re ensuring your construction company won’t be slowed down by a slow supply chain.
Shortage of skilled workers; getting creative
It’s not just your imagination, there’s a shortage of workers in construction right now. Although the trend started years ago, the pandemic has made the lack of skilled workers more noticeable and direr. The consequences to the lack of skilled workers – companies can’t bid on or complete new projects.
To lure skilled candidates, construction companies are offering higher wages and more benefits. Some businesses don’t require any experience, looking for people new to the trades.
Companies can attract new workers, even without adding wages and providing more medical benefits. According to HR Daily Advisor, candidates want a company that has the same values, recognizes good work, provides career opportunities, and communicates effectively. Even though medical benefits are spendy, companies can offer more perks (that contribute to overall wellness) from gym memberships to daycare options or additional time off.
Construction companies can even offer things other industries can’t – work-life balance with a job that isn’t a boring desk job.
In times like these, builders can get creative to get the talent they need to keep projects moving.
Safety issues; safety spending
Let’s face it – safety is expensive. But it’s 100% necessary.
It costs money to ensure employees and contractors are protected with the right gear. Ear and eye protection, helmets, masks, and more are needed to keep builders going.
Those expenses reduce overall costs – such as worker compensation claims as well as workers being out (grinding productivity to a halt) due to injury. Even tools that improve ergonomics can reduce worker hazards.
Industrial supply distribution companies, such as Lane, provide a variety of safety gear. Plus, we can work with you to provide ideas on how to best protect your workers based on the type of work. Vendors like us specialize in solutions for your budget to best protect your most valuable asset – your people.
Opportunity may be around the corner, too – government assistance
Homeowners are clamoring for housing and more hospitals are needed. But there may be additional work for construction companies. President Biden’s infrastructure proposal – should Congress pass it – will improve roads and bridges. The plan will also expand clean energy, such as using solar panels. It’s a few trillions back into the economy and many different types of construction companies will be needed.
Summary for construction
Sure, construction businesses face challenges, but the road ahead looks rosier. If companies can be creative in how they look for talent as well as relying on vendors who are dedicated to helping them solve issues, they could see record growth. At Lane, we’re helping construction companies and builders get the right products and processes in place to save time and money.