As businesses across the country are contending with actual and potential impacts of the COVID-19 crisis, the construction industry seems to have - so far - largely avoided material supply shortages that are affecting other industries, but, concern is rising. This is according to a March 2020 survey of construction industry leaders conducted by Enterprise Bank & Trust.
At least for now, the construction industry has not experienced a significant building materials shortage as the result of the COVID-19 pandemic. However, the construction industry is concerned that impacts on their supply chain caused by the pandemic-related economic slowdown may soon be headed their way.
Building Material Deliveries Mostly on Schedule
Supply chain constraints that began earlier this year as a result of factory shutdowns in China have spread to a number of industries worldwide. But, unlike the automotive industry and some other manufacturing sectors which have been significantly impacted by parts and component shortages, construction companies seem to be getting most of the supplies and building materials they need. Material suppliers report that orders and deliveries to their construction customers are at near-normal levels.
In fact, some suppliers are even making expedited deliveries of materials to high-priority construction projects such as hospitals and schools that are being targeted for early completion.
That said, product supply concerns are growing.
“When companies try to ramp back up, there is growing concern about product supply problems,” says Steve.
Although material deliveries currently seem to be keeping pace with demand to date, construction companies are reporting a shortage in one area – skilled labor to install equipment that they have already purchased. Travel restrictions due to COVID-19 are making it difficult for some companies to obtain the expert labor needed to complete previously scheduled equipment installations. Additionally, some companies are reporting difficulty getting permits because their municipalities are shut down.
From our survey, companies are reporting a few solutions they are implementing:
- Keep overhead as low as possible.
- Have cash projections in place to plan for any contingencies.
- Focus on building the project pipeline in lower-risk areas that are less impacted by the current situation.
Construction Projects Continue as Builders Plan for Contingencies
Building supplies are being delivered and work continues as planned at many construction projects. Continuing to obtain materials through the normal supply chain system is a concern, but it is not currently at the top of the worry list for many builders, our survey showed. However, aware that the COVID-19-related economic slowdown could interrupt the flow of materials, construction companies are focusing on planning and being prepared in case their job sites are in jeopardy of being shut down.
For more information about what companies like yours are experiencing and how they solve for challenges associated with the pandemic, follow us on social media and visit our COVID-19 Trends page and we’ll keep you up-to-date on what we are seeing.
