Through the years I have learned that future projections typically do not come true, so this article is not about projections for 2018 but about possible trends for the construction industry.
The New Year will bring challenges in hiring quality personnel as well as retaining current staff. As commercial workloads increase, so will the need for skilled labor. Construction companies will have to pay more to attract workers to the construction industry, provide on-the-job training and encourage workers to accept responsibilities of supervision. Our more seasoned personnel will be required to train the younger employees and those employees that are willing to learn new skills. Because construction tasks require manual labor, hourly rates will have to increase above hourly rates which do not require as much manual labor. My thoughts are the difference will be about $2.00 per hour.
As labor costs increase, there will be more opportunities for prefabrication and automation. Commercial construction still has a way to go before automation reaches to job sites, but equipment is currently being developed to help reduce manpower. There will come a point when much of commercial construction projects will be built in a factory and those parts will be shipped and then assembled on the job site.
As we move farther into 2018, we should see less demand for repair and replacement in Texas and Florida due to the hurricanes of 2017. Hurricanes Harvey and Irma hit in August of 2017 and damage has been estimated to be in $200 billion-dollar range by Bloomberg. As the demand for materials and labor for repairs continues to decline in these two areas, material delivery lead times should normalize, and skilled laborers will hopefully redistribute from the hurricane damaged areas.
The events of December provide strong indications that business investment may be on the rise. Record Christmas season sales and a pro-business tax bill establish a solid foundation. Companies may be more willing to invest in new buildings to house people and product, therefore increasing commercial construction demand.
All looks positive for commercial construction in 2018. Only time will tell.
By: Eric A. Schoppman