New Year, New Trends
The New Year marks a lot of changes whether that is New Year’s resolutions, new ideas, or new trends. The same is true for the construction industry. 2022 has many new construction trends on the horizon. Understanding these trends will help shape companies’ goals and successes in the coming months.
Top 2022 Trends for the Construction Industry
There are four major construction trends for 2022:
- Industry Growth
- Long Lead Times and Supply Chain Issues
- Labor Shortages
Many of the industry trends to expect this year are the ripple effects caused by the global pandemic. The pandemic stalled construction growth in 2020 which created a bottleneck in the industry. After two years of learning to cope with the onslaught of COVID-19, the construction industry is experiencing a huge economic boom. With massive amounts of new projects coming down the pipeline, there is a continued struggle with labor shortages and supply chain issues. Companies who are able to handle these issues effectively will be able to take advantage of the massive industry growth.
The global pandemic and the 45 Days to Slow the Spread hit pause on all major construction projects. With all the uncertainty in 2020, many municipalities and private investors decided to hold off on construction projects. This stunted growth in 2020, however, in 2022, the industry will be playing catch-up. A Delottie survey stated that after 2020, “Total construction spending recovered and peaked at $1.57 trillion in July 2021, a record high for the series.” The construction industry roared back to life by the summer of 2021 and it will continue to grow in the coming year.
Along with this, the United States federal government has passed the Infrastructure Investment and Jobs Act that will pump $550 billion over five years to update American infrastructure. Some of this money is allotted to public transit projects including roads and bridges, but it also has tax incentives to promote partnerships between cities and private investors. Both of these catalysts indicate that the construction industry will continue to grow in the coming months and that many public projects will be issued in 2022.
Long Lead Times and Supply Chain Issues
Because the industry is experiencing tremendous growth, it is impacting lead times and creating scarcity on certain construction materials. The ones that have been most heavily affected since the pandemic are steel, lumber, and concrete. For some of these items, the lead time is 6-8 months.
Not only can long lead times affect the schedule of a project, it can also impact the budget. Scarcity in materials are causing a high demand which is inflating the prices. J.M. Thompson’s Vice President of Pre-Construction Services, Mike Pritt, is noticing this trend and understands the impact it has on a project. He stated, “For the calendar year of 2021, we saw massive price changes ranging from long overdue increases between 12-15% in concrete to the excessive 45% or more in steel and metal framing. I predict that we will see 6% increase at a minimum in Q1 of 2022, with specific increases of 20% on gypsum and over 15% on piping before we buy our Valentine’s Day candy.”
At J.M. Thompson, we are not only aware that this is continuing to be a concern for owners and clients, but are doing our best to mitigate these price changes. Pritt commented, “My advice to clients has been to engage your pre-construction and project team early and often. Our team has had great success when we can implement a more surgical process and help our clients by proactively providing solutions.” Each solution will be project specific, but engaging your team early can help mitigate long-term delays and large price fluctuations.
According to the Bureau of Labor and Statistics, over forty million workers quit their jobs in 2021. That’s over 20% of the American work force that has decided to make a change in employment or simply segue out of the labor pool. Not only is this effecting food service and grocery stores, it is impacting the construction industry. Finding and retaining workers as a general contractor in North Carolina or subcontractor is becoming more of a challenge.
At J.M. Thompson we are striving to recruit new talent through a variety of ways. We pride ourselves on being a relational company and we strive to be that not only with our employees, but also with the subcontractors we employ. By building these strong relationships, we retain incredible workers on the jobsite. We also recruit new talent through college career fairs and summer internships. Finding good workers can start at the college level and beyond. Our company desires to pour into the next generation of project managers and superintendents. These are a couple of ways that we are combatting the current labor crisis.
What Does 2022 Hold?
A new year brings with it a torrent of new trends. Understanding the positive and negative trends of the construction industry can help companies create goals that will lead them to great success in 2022. “As a company, we are obviously very excited about the opportunities in the Triangle and beyond. We understand the market is in constant flux, but we view that merely as an opportunity to showcase our depth and breadth,” Pritt stated. The long lead times and labor shortages will be a hurdle to overcome, but with effective strategies in place, construction companies can participate in the economic boom in new construction projects.