The Coronavirus (COVID-19) is causing problems for the construction industry. That, along with Trump’s tariffs and significant labor shortages have caused quite a few problems. Experts are saying that the coronavirus could have a lasting effect on the future of construction. The industry has suffered in the last few years from labor shortages. Now with the news telling us that 75,000 people inChina alone got sick from the virus, this leaves American construction in a quandary.
Has the virus plateaued?
In China, 2000 people have been killed to date by the virus. Though the nation is doing its best to contain the virus and quarantine those sick, US builders are facing sharp falloffs in production. Of course, the world faces many unknowns from the coronavirus at this time. It does often take time to see the full effect of something this widespread. According to the New York Times, many industries will suffer including everything from smart phones to automobiles.
US building chains effected
Chief economist for Dodge Data & Analytics, Richard Branch, commented: “With China’s manufacturing output declining as factories are temporarily sidelined,” he said, “it’s likely that U.S. building product supply chains will be affected, with costs potentially moving higher.”
The American construction industry could face higher material costs because much of the material for construction does come from China.
Price increases expected
Economist, Richard branch, has stated that about 30 percent of building materials used in construction projects are imported from China. They are the biggest supplier of steel, cabinets and fixtures, aluminum, copper and many other items. The slowdown in construction will most likely be accompanied by price increases, which is not good for America’s construction industry.
The price of steel is expected to rise this year anyway due to Trump’s tariffs. A reduction in Chinese imports is expected to have a strong ripple effect throughout America’s construction industry.
Companies like Ford, Apple, Nissan and General Motors have already suffered financially due to the tariffs. Leaders of global construction firms have noted that thus far, their financial returns have been impacted very little.
AECOM CEO Michael S. Burke told investors spoke about this recently saying, “We’ll continue to evaluate that guidance as we start to see things hopefully return to normal. At this point, we don’t expect it to have any impact on our business.”
Other large construction groups say that they are keeping an eye on the situation but the most notable effects have been price increases on steel. All agree that the uncertainty of the situation is worrisome. Most larger construction outfits are concerned about the coronavirus. But the leading worry comes from the fact that no one knows how long the crisis will continue. Perhaps it has plateaued and things will shortly return to normal. That is the hope.
In China, many workers are returning to their jobs and factories are reopening. So this is a positive sign. All of the transportation networks will be back online soon when the quarantines lift. Though there are now a backlog of orders from China, it is expected that they will quickly get that taken care of and life will return to normal.
Richard Branch comments a final time: “The exact extent to which they increase will be determined by how quickly the virus can be contained and how much product can be substituted from other countries.”