The Curveballs to Construction – Adapting at the Plate
John Lohan • Jul 20, 2022
The building and construction industry is facing an unprecedented confluence of economic and market challenges.
As our world begins the return to “normal”, industry challenges and the global economy still have a few curve balls to throw at us. Changes in commerce and pandemic restrictions have got us only through the first couple of innings. Nothing has been outside the realm of possibilities to keep company owners swinging. For most of us in the construction industry, we’re behind in the count but they haven’t gotten us out of the game yet.
How have we been managing it? We decided to outline a few of the changeups that have been thrown at our industry and point out some lessons while we aim to find solutions and thrive. This two-part series first looks at the biggest issues for the construction industry in general and then how Double Black Construction has worked with their industry partners to alleviate them.
Shortages, Inflation and Interest Rate Hikes: The economy usually doesn’t have such a varied arsenal of pitches to throw
In baseball, when a team with a big lead gets eases up, they tend to ignore the signs of impending trouble. The switch in momentum is never just one factor, it’s a confluence of actions or forces that changes everything.
Construction is no different. The industry has faced significant challenges from many unexpected directions. Increased demand, labour shortages, inflation and issues at major production plants have happened concurrently, at a pace no one could have anticipated. The result has been periods of chaos. And it couldn’t come at a worse time, at a point where crews need to catch up on backlogged jobs or regain lost revenues. The pent-up demand has meant more construction work is needed now, and orders are steadily coming in, but with intense pressure on an industry reliant on a delicate supply chain. Essential materials originate from a concentrated group of producers, moving through specific geographic ports prone to bottlenecks at the best of times.
Supply chain disruption has meant building materials have been hard to source for everyone. It’s the most obvious sign of a changing economy struggling to find a “new normal.” In typical situations when prices rise, suppliers produce more to take advantage of higher price demand that ultimately drives prices back down and resets the market. But it takes time to ramp up production and, in the meantime like we’ve been seeing in the concrete industry, the process doesn’t happen fast enough to prevent shortages.
For commercial and industrial building construction, we’ve had to contend with more than sourcing cement. Steel, components, electrical and plumbing parts and especially skilled tradespeople have all been more difficult to procure. These supply chain issues continue to affect most building materials, creating scheduling and delivery delays that reach well into future projects. Double Black Construction is fortunate that most of their pre-engineered components come from domestic manufacturers that offer reliability and shorter transportation times. Not every construction firm is fortunate enough to access these relationships.
With industry-wide shortages and delivery delays, higher prices have also landed, due to record-setting inflation, rising interest rates and suppliers passing on their higher debt payment costs to their construction purchasers. Elise von Scheel’s CBC News
article, “Cement shortages are putting pressure on Canada’s construction industry”
quotes Statistics Canada’s raw materials price index that gravel and clay have risen eight per cent since last summer. The article also states how “ready-mix concrete is nine per cent more expensive than it was at the start of 2021… and building material prices for items like lumber, paint and concrete, have risen more than 30 per cent since the start of the COVID-19 pandemic.”
“IF MY UNIFORM DOESN’T GET DIRTY, I HAVEN’T DONE ANYTHING IN THE BASEBALL GAME.”
~ Rickey Henderson
Construction is also a tough-as-nails business where dirty clothing is also a symbol of pride for crews. The work is difficult, tough and tiring, but team success only comes with putting in effort where people can see the results of your labour. The public still sees the cranes, the jobsites, the hardworking people and think that life is back to normal in a growing economy. The reality is that many equally diligent people working behind the scenes are equally as determined to keep the business running, source the required materials and keep construction running smoothly despite all the obstacles in their way.
Managing the Team to Effect Positive Change
As we’ll review in the next part of this series, John Lohan and his team at Double Black Construction employ a variety of methods to deal with a changing marketplace and economic headwinds. Looming recession, and the resulting tightening of spending, is one of the biggest challenges for every construction firm. Ample planning and pragmatic practices companies use today will make a huge difference in how resilient the industry will be and how prepared it is to ensure clients continue to get the final building solution they ordered.
In the face of rising prices and unpredictable supply levels, one way clients can help ensure a smooth building project is to start planning early and to place construction orders well in advance. Not only can it save thousands on material costs, but it helps ensure your raw materials are placed in a priority order and ready when the crews need to start. Contact Double Black Construction today at (833) 322-2722
or by email at info@DoubleBlackConstruction.com
to get your free quote, discuss how we can build your perfect solution and knock your project plan out of the park.
About the author:
John Lohan has over 15 years of experience designing, engineering and installing over 500 metal buildings for architects and clients across North America and the globe. He’s managed all aspects of steel building construction, including material logistics and managing local and foreign construction teams. John also has special expertise in concrete foundation and excavation. He can be contacted at Double Black Construction at (833) 322-2722, by email at john@DoubleBlackConstruction.com
or on LinkedIn.
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