The construction industry has had more than its share of significant challenges over the past year due to the global pandemic. There have been rising — and in some cases skyrocketing — prices for construction materials such as wood. It’s been difficult finding enough skilled workers — and keeping them. And construction and contracting businesses nationwide have had to continue to adapt safety plans to deal with an unprecedented and unpredictable worldwide threat.
While many of these challenges still exist in some form, there is hope, as well as a reason to believe, that 2022 will be a better year for the U.S. construction industry as a whole. The infrastructure bill is widely considered to be a big plus for construction. There also is optimism that residential and commercial contractors will experience increasingly favorable operating conditions as the year goes on.
More than 60% of contractors say that the No. 1 challenge of 2021 was availability, scarcity and the subsequently higher prices of critical building products/materials. According to the U.S. Chamber of Commerce Commercial Construction Index, 93% of U.S. contractors are still facing at least one type of materials shortage — mainly involving wood, steel and insulation/insulated products. The good news: Contractors are hopeful that the worst of the shortages are behind them. Several reports show that the construction industry supply problem could ease somewhat by mid-2022, bringing down material prices. Lumber prices already have fallen back to pre-pandemic levels.
The second most pressing concern for contractors is the shortage of skilled workers. According to the chamber, 55% of U.S. contractors are currently reporting high levels of difficulty finding skilled workers, a pre-pandemic problem that became more pronounced over the past two years. More than 40% of contractors in the chamber’s report said they have had to turn down work due to shortages of workers.
The labor shortages have been pushing wages higher. According to the chamber, 40% of contractors are reporting a high degree of concern about the cost of hiring skilled employees. Of those, nearly 80% say they have had to increase compensation over the past six months in order to recruit and retain quality employees.
Where does the industry go from here? Contractors are cautiously optimistic. Contractors’ confidence in the overall economy and industry is rising and higher than at the beginning of 2021, although it’s still significantly below pre-pandemic levels. Revenue expectations are slightly more optimistic than they were a year ago and contractors generally believe conditions will improve in the coming year. Project delays due to the pandemic continue to decline nationwide. Ultimately, contractors are hopeful that 2022 will offer more relief from the pressures and challenges that the pandemic put in place two years ago.