November 28, 2021

McKenzielee Blog

Wicked Clever House Experts

Contractor concerns climb as COVID-19 roils the market

2 min read

Worry about the supply of skilled labor remains a concern, though it slipped to second place after availability of work as a threat to business. In 2021, 24% of respondents worried about securing skilled labor, compared with 38% in 2020. More than 50% of respondents annually the three prior years, from 2017 to 2019, were citing worries about the lack of trained construction workers.

Reflecting the staggering run-up of steel, rising and then falling lumber prices and others, 15% cited material costs as a threat to their business, up from 9% a year earlier. It was never cited as a concern by more than 10% since 2009, and for a few years just 3% of respondents saw rising prices as a worry.

“It’s the most challenging aspect of the business today,” said Peter L. Snavely, a vice president of Chagrin Falls-based Snavely Group, a construction and realty development firm. “It does not sound like price increases will slow down next year.”

Gingerich said it’s a time for construction business owners to be cautious.

“Contractors are notorious for aggressive pricing, trying to land more work, even at less margins,” Gingerich said. “It’s not a good formula.”

However, some positive factors have solidified within just the past month. Congress finally passed the largest infrastructure bill in decades, though Gingerich said contractors serving the highway and similar markets are a smaller component of the industry than other parts of the building business.

Meantime, Sherwin-Williams Co. has started building its new research center in Brecksville and is committed to building a 36-story headquarters in downtown Cleveland. Typically, big jobs such as those keep big firms busy, clearing the field for smaller companies to snag other jobs.

Jason Jones, vice president and Northeast Ohio regional manager for Turner Construction Co., said activity has increased as the pandemic wore on.

“There is more momentum now than at the beginning of the year,” Jones said. “It’s clear from looking at bidding that electrical HVAC (heating, ventilation and air conditioning) contractors are hungry. That’s not to say there is not a lot of uncertainty with problems in the supply chain and price volatility. We’re seeing a lot of proposals now. Over the year, health care was the first market to come back, followed by commercial work. The higher education market is starting to perk up. I see a lot of reasons for optimism.”

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