If you’re a construction business owner, it is important to be aware of upcoming trends in the industry. Being able to anticipate what is ahead will keep you from falling behind and help you remain competitive in an ever-changing business climate.
The construction industry had a good year in 2018. Approximately 280,000 new jobs were added, and worker fatalities dropped to their lowest point since 2011. On the other hand, the industry faced some challenges, such as dealing with labor shortages and increased labor costs.
Looking at the beginning of 2019, the trends that are emerging include:
The industry has been perking along nicely and registered its seventh consecutive year of growth, rising 5.4% since 2017. While this growth is expected to continue, it is predicted to be at a slower rate. In the U.S., the forecast for total construction is at $808 billion, which is in keeping with the $807 billion that was predicted last year. Experts say this points to less vibrant growth in the coming year. The 2018 tax benefits we have enjoyed are starting to fade, and experts say that short-term and long-term interest rates will increase. While the possibility of a downturn is out there for 2019 or 2020, experts believe that it won’t be as drastic as the downturn in 2008.
Labor Shortages and Material Costs
The labor shortage is being felt around the country. Finding qualified workers to keep up with the demand in construction is challenging. As of November of 2018, unemployment was at a 50-year low of 3.7%, creating a labor shortage across the U.S. This year The Associated General Contractors of America reported that 79% of firms expect to add employees this year. At the same time, however, 78% of the firms report difficulties in finding salaried and hourly positions.
Prices for construction materials have been on a steady rise. Threats of trade wars and tariffs have only added to this. Experts predicted a materials cost increase of 2-3% through 2018. Associated Builders and Contractors, however, reported that there was a 9% increase in building materials in the past year. The biggest increases were seen in softwood lumber, iron, steel, and steel mill products.
Integrating More Technology
Many recent technological advances have made their way into the construction industry and will continue to do so in 2019. The use of drones and 3-D printing, for example, are proving useful in the industry making construction work safer and easier. Other interesting technologies are on the horizon as well, including self-driving cars and the use of Business Information Modeling systems (BIM), which will assist in making the collaboration and coordination of projects much easier.
It seems that Americans are more focused on the concept of sustainability now more than ever before, and that is being reflected in the construction industry. Interestingly, construction work accounts for 20% of global emissions. Green construction involves working on projects in a resource efficient and environmentally responsible way. Going green involves adopting smarter construction methods as well as using green materials such as carbon building facades, asphalt that will “heal” itself and thermally driven air conditioners. Sustainability and green construction are a trend that is expected to continue. Staying up to date on green technologies and methods can give you an edge in being selected for projects that require or prefer green technologies.
Construction work can be dangerous and construction workers suffer from far more injuries and fatalities than workers in other industries. This has led to important new and improved ways to increase safety. Technologies are being designed to make construction projects safer, which include new mobile apps and computer programs to help employees adhere to safety guidelines.
If you need help planning for the business year ahead or have a construction law issue you would like to discuss, please contact us.