Construction industry trends
When the world came to a standstill in March and April of 2020, the construction industry wasn’t spared. Many jobsites fell quiet as projects were delayed or cancelled due to the uncertainty caused by the COVID-19 pandemic.
As they look ahead, industry leaders expect a difficult year, but they are cautiously optimistic that working through project backlogs will tide over many fabricators and contractors as the industry rebounds.
One thing is certain: The pandemic will have lasting effects on the construction industry as more contractors search for ways to improve efficiency and make up for time lost on projects. New technologies can provide critical efficiency gains as contractors face increased pressure to stay competitive and win bids.
COVID-19 impact on construction
The global pandemic led to much uncertainty that spurred delays and project cancellations in construction, especially in Q2 and Q3 of 2020, several national organizations report. Many steel fabricators and construction contractors looked to cut costs and keep work flowing as they dealt with loss of financing, supply chain issues and projects put on hold due to economic uncertainty or safety concerns.
Associated General Contractors (AGC) of America, which regularly surveys its membership, says a high number of association members reported a project being delayed or outright cancelled due to the pandemic.
Even though early on in the pandemic many states declared structural steel, fabrication and construction as essential industries, uncertainty regarding financing still put the brakes on many projects. Expanding a convention center or building a new hotel, for example, no longer made sense in the 2020 landscape.
“Why build a stadium if you’ll have no one in it?” says Brian Turmail, vice president of public affairs and strategic initiatives for AGC. “Our members have a very pessimistic outlook for demand for new projects in 2021, especially on the private sector side and on the building side. They are slightly more optimistic about public sector investments.”
American Institute of Steel Construction (AISC) members report they saw work start to slowly rebound in Q4 of 2020, says Brian Raff, vice president of market development for AISC.
“There was a pretty big dip,” Raff says. “Now we’re starting to see folks climb out of that.”
Construction outlook for 2021
The AGC 2021 Construction Hiring and Business Outlook report, released in January of 2021, states that most contractors expect demand for many types of construction to shrink in 2021, even as many projects remain delayed or cancelled due to the pandemic.
“This is clearly going to be a difficult year for the construction industry,” said Stephen E. Sandherr, the association's chief executive officer. “Demand looks likely to continue shrinking, projects are getting delayed or canceled, productivity is declining and few firms plan to expand their headcount.”
Contractors are most pessimistic about the market for retail construction, and they are similarly concerned about the markets for lodging and private office construction, according to the report.
An AISC member survey shows more optimism. AISC members primarily represent structural steel fabricators, steel mills and steel service centers. The AISC Business Barometer Report for Q1 of 2021 shows that on-hold projects continue to improve, with 30% of respondents indicating more projects on hold, down from its high of 64% in Q2 2020. In addition, members reported Q1 business conditions as “good” in all sectors except for bridges, with most sectors showing improvements compared to the previous quarter.
“We’ve got fabricators that are working through 16- to 18-week backlogs, and on the bridge side it’s even longer,” Raff says. “So at least for now, that’s a really good sign and that allows the fabricators to weather the storm.”
Given that delays will likely remain on some projects, exploring ways to improve productivity is more important than ever.
An AISC program called Need for Speed has the goal of increasing the speed of steel construction projects (for example, a building or a bridge) by 50% by 2025.
“We have seen an uptick in fabricators looking into innovative technology,” Raff says.
Finding efficiencies is a priority
Along the lines of the Need for Speed program, many construction fabricators and contractors are looking for more efficient ways to do business and new technologies that save time and money. While efficiency has always been a priority, it’s especially critical now as the industry looks to rebound from the COVID-19 slowdown.
The AGC survey shows that construction is essentially less productive now than it was before the pandemic. Increased safety measures that have been implemented on jobsites due to the pandemic — such as restricting how many people can work in a tight space together or how many workers can be shuttled to a remote jobsite together — protect worker safety but have made the operation less efficient.
"What people don't appreciate is how much more expensive it is to operate during the pandemic,” Turmail says.
As a result, many contractors are looking for ways to improve efficiency and reduce costs.
“The pandemic has almost worked like an accelerator on existing trends,” Turmail says. “A lot of contractors have been exploring technologies, like using robotics or using drones to do inspections. All of a sudden, what was an interesting curiosity before to see if it was worthwhile becomes a necessity.”
AISC member feedback echoes this, Raff says. More of their steel fabrication shop members are using robotic welding, for example.