We all need the construction industry to keep our economy alive. It experienced its ups and downs, especially back in the Great Recession. However, the industry bounced back from that, but you should know what to expect in the coming years to prepare your company. Here is a quick summary of what the future looks like for the construction industry in America.
A Steady Growth
In 2019, the construction industry had positive momentum and growth and had a growth rate of about 2.1%. Many contractors are sure that this will continue onto the next year for 2020. If there is a cash for fund stalled projects and work gets released quicker, some national reports expect that it will get higher by 3% with extra room for expansion. However, the release of work into production can get delayed starts and be unpredictable, and it can continue through to 2020.
While most of the news for the construction industry is positive, it may not be great for everyone. There are different sectors of development and construction, so not all of them will get as much business as the others. For instance, recreation and amusement construction will be unpredictable, whereas power and solar construction will have steady growth and improve. Since big budget airlines are gaining more popularity, train and airport infrastructures will garner a lot of business. General transportation and highway infrastructure funding may also improve; however, it is uncertain if there will be federal funding for big projects.
2020 looks like a positive year for construction; however, you should still proceed with caution since there are risk factors still involved. For instance, the national economic uncertainty, along with regulatory and political uncertainty. Rising interest rates and material costs are other things that people should look out for in 2020. The shortage of construction workers can pose a problem since the industry may not be able to meet the demand.
Labor shortages are a significant issue that the construction industry faces. The problem may not lie in the number of people looking for a job – the point is that there are not enough skilled people out there. Another issue is material pricing pressures. Since the construction company will need more materials to complete their projects, the cost of materials such as self-drilling timber screws will rise. While not all materials will have a considerable price increase, certain materials such as steel will continue to fluctuate throughout 2020.
Over the years, construction rises, but construction firms should focus resources on projects that have a higher controllable risk and give a decent financial return. As long as a firm can rethink their approach towards the mark, they should be able to thrive. Since there is a higher demand for projects, people should focus on the quality of the projects. Most firms do this by accepting projects that they are best at instead of taking any project that gets offered to them. For instance, a commercial construction firm would deny a project to make a residential home since it is not their area of expertise.
The overall outlook for construction in 2020 looks bright, given that you know how to manage the demand and labor shortages.