Statistics from the CDC and other relevant national health authorities show that the COVID-19 pandemic has hit over 160 countries. Unfortunately, the United States is no exception. In the previous eight months, the coronavirus outbreak has ushered in a dramatic paradigm shift. It hasn't only affected the public health sector. Every single aspect and sector of the economy has felt an impact as well. Most of them for the worst. In this article, we will examine the COVID-19 impact on the construction industry in Chicago.
Coronavirus and Construction
As we’ve mentioned above, no industry has been spared the adverse effects of COVID-19. This includes all kinds of professional services, finance, hospitality, different types of manufacturing — and the construction industry. All of these sectors will continue to feel the disruptions caused by the pandemic, even if a vaccine is produced by the end of the year. When it comes to the traditionally robust construction industry in Chicago, we could divide the general COVID-19 effects into three parts:
- Labor shortages
- Disruptions of the supply chain
- Financial downturns in general
Chicago contractors — and others across the nation — are likely to suffer significant financial stress due to these factors. The same goes for owners and design professionals.
1. Labor Problems
There are certain practices that have been used over the course of the coronavirus pandemic across the board. For instance, safety measures have included a huge shift to remote work. Most office employees received directives to remain at home and work from there. For many industries, this is a possibility. Unfortunately, that cannot be said for tradespeople and contractors in the construction industry in Chicago.
This is just the tip of the iceberg. There are larger issues that plague the construction industry in the United States. For example, the pool from which to draw on skilled personnel has already been rapidly aging and constantly dwindling.
These shortages grow exponentially when most older employees choose to remain at home due to the coronavirus dangers or their employers direct them to do so. In such a situation, the already existing shortages of skilled laborers increase exponentially. This is a huge issue in terms of project deadlines.
However, meeting goals and deadlines isn't the only thing that can be disrupted with COVID-19 induced labor shortages. Not having enough skilled laborers onsite will also provoke issues in quality and safety.
2. Supply Chain Distruptions
Apart from the coronavirus causing labor issues, issues in material procurement and supply chain disruptions have been widespread as well. These impact the construction industry in Chicago and beyond as well.
First of all, plenty of construction materials come from Chinese suppliers and factories. Due to the pandemic that originated in this country, most local businesses (including producers of construction materials and goods) have suffered government restrictions and/or have been shut down.
A third of all construction components and materials procured for the United States construction industry stems from Chinese manufacturers. This makes procurement a huge issue. China supplied all kinds of flooring materials, electrical components, insulation, plaster, and steel. Bear in mind that “one third” is just an average figure. There are construction companies that procure up to 85% of all used materials and components from China.
Plus, the business interruptions that have happened to suppliers aren’t the only issue. The supply chain that transfers those products from manufacturer to end-user has suffered a heavy coronavirus impact as well.
3. Market Downturn
You do not need a degree in economics in order to realize the extreme difficulties that all industries have been presented with. The pressures faced by our economy have impeded the demand for both commercial and residential construction. For this reason, a heavy market downturn is expected.
Many companies that have planned to replace their current facilities or expand them are likely to postpone such practices. If you were looking to transfer your business to a new location, make sure that your company is ready for such a change in the current circumstances.
Developers are also massively holding off on residential and office construction. There are indications of lending sources closing down as well. Due to this, homeowners won’t undertake new construction or remodels that are capital-heavy. The skyrocketing government expenses (for local, state, and federal governments) and the reductions in tax bases will also negatively impact the scope of public projects.
Most macro-economists agree that the construction industry, especially the commercial one, lags behind the general economy by a year or a year and a half. This means that, while some of the most obvious negative effects of the coronavirus on the construction industry have been felt already, the worst is unfortunately yet to come.
Proper Communication
This pandemic is something that we cannot roll back or change. While the virus itself can be stopped with the production and distribution of a vaccine, the impact on the economy has already been made. That's why subcontractors, contractors, design professionals, and owners should think about how they will handle these effects as they continue to be felt in the next few years.
The most important aspect of this is proper communication. This goes for communication between all actors in the construction sector. A lot of issues can be minimized, if not avoided, as a result of communication on things like material substitutes and other decisions that will affect everyone involved in a particular project.
Conclusion
There is no way to currently assess just how big of an impact the coronavirus pandemic has had on the construction industry in Chicago. However, while certain issues have already come up, it's crucial to understand that the brunt of the blow is yet to come in the succeeding months.
Editor's note: This is, indeed, a confusing time for the construction industry. DataBid is working tirelessly to report and distill the news that can help you and your company make the right decisions and keep you up to date on the constant changes as they are made. We hope our coverage brings some clarity amid all the confusion.
