Steps to Recovery for the Construction Industry

According to some industry voices, low interest rates may create an opportunity for growth in single- and multi-family construction in certain markets, beginning with regions that see economic recovery. In the short term, however, the industry will have to contend with continued supply chain disruption and the lingering effects of weakened demand.

“With the disruption and breakdown of global supply chains, the construction industry is likely to be indirectly affected for some time,” says Cristian Grossmann, co-founder and CEO of Beekeeper, a mobile productivity and safety platform for frontline workers, including the construction industry. “Additionally, the combination of high unemployment and low GDP growth could result in a slowdown in demand as consumers watch their pocketbooks.”

Though there was an overall dip in construction demand during the early months of the pandemic, there has been a recent increase in demand in certain markets, notes Greg Cobb, president at Ei Corporation. (The company provides engineering, building performance and quality assurance solutions to builders.)

“An initial drop-off in demand in the construction industry caused by the uncertainty of the pandemic has been replaced in the past several weeks by strong demand in certain sectors,” says Cobb. “For instance, single-family residential has seen a strong bounce-back, with buyers looking for more personal space, including back yards and extra room for home offices. Multi-family residential also remains strong in many regions, simply because affordability is the primary driver of that product type.”

In coming months, Cobb believes that construction demand will likely mirror the economic progress of each region.

“Those regions that recover quickly will see strong demand in construction, whereas those regions that struggle to get their economies back on track will see construction demand delayed, with a slower recovery,” he says.

While it’s difficult to know for sure what the future will bring for the construction industry, companies can take solid steps now toward business recovery.

1. Ensure employee safety.

“Employee safety comes first,” says Cobb. “Provide proper personal protective equipment (PPE) and training on social distancing on construction job sites to minimize risk of transmission. Also allow office-based employees the ability to work from home.”

2. Communicate effectively and often.

“In these times of uncertainty and anxiety, communication is key,” says Raul Duran, vice president of communications and marketing at CEMEX USA, a building materials company with offices worldwide.

“During the pandemic, we have communicated on a consistent basis through webcasts, e-newsletters and more direct forms of communication with stakeholders, including customers, suppliers and employees,” says Duran.

Double down on initiatives that increase efficiency and productivity and focus on saving money and driving revenue.

—Christian Grossman, CEO, Beekeeper

According to Duran, CEMEX has encouraged feedback from employees and customers.

“We’ve found it vital to understand our workforce and customer needs and how they’re adapting during the pandemic,” he says. “This has enabled us to incentivize repeat business from customers and ensure that protocols are clear for our employees and they have what they need to perform well.”

3. Reassess your profit margins.

To remain competitive, understand your profit margins on the various types of projects you perform, suggests Joshua Brown, founder of Renovation Collective Toronto, a Toronto construction company.

“Identify which jobs provide the best profit margins and which produce the least,” he says. “From there you can establish a priority list for your internal efforts with an end goal of booking as many of those high-profit jobs as possible and reducing projects that are too lean.”

4. Work with client budgets when resuming projects.

With jobs that were quoted prior to COVID and put on hold, you may have to make some adjustments, according to Brown.

“Some clients still want the work done that was planned prior to the pandemic, but they’re not comfortable spending the same kind of money as when we began discussions,” says Brown. “I educate clients about more cost-effective alternative product finishes, and then let them decide. Doing this gives them ownership of their decisions.”

5. Stabilize, manage and optimize disrupted supply chain networks.

Overcome challenges stemming from unpredictable supply chains common nowadays by sourcing materials from alternative suppliers. Locate more regional suppliers so that you can ideally ensure timeliness on projects. Also focus on building up your inventory when supplies become available.

6. Stay agile and reallocate resources.

The ability to pivot at a moment’s notice will remain essential to a successful recovery for the construction industry.

“Double down on initiatives that increase efficiency and productivity and focus on saving money and driving revenue,” Grossman says. “This is most effectively accomplished by investing in digitization and innovation. Leverage digital collaboration tools and end-to-end project management solutions to beef up productivity and help your teams work together more efficiently.”

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