A year after lockdowns related to the COVID-19 pandemic began, contractors are still experiencing rising materials costs, widespread supply-chain problems and continued project deferrals and cancellations, according to a member survey released March 11 by the Associated General Contractors of America.
The survey included 1,489 AGC contractor-members in 25 states who responded to at least some of the questions. Based on the survey results, association officials urged Congress and the Biden administration to take steps to eliminate tariffs on key materials, address shipping backups and boost funding for new infrastructure to help the industry recovery.
“The survey results make it clear that the construction industry faces a variety of challenges that threaten to leave many firms and workers behind, even as some parts of the economy are recovering or even thriving,” said Ken Simonson, the association’s chief economist. “The pandemic has left the supply chain for a range of key construction components in tatters and undermined demand for a host of private-sector projects.”
Four out of five contractor respondents said they are spending more on personal protective equipment, hand sanitizers and other health-related expenses. More than half said their projects are taking longer than they did before the pandemic. Higher costs and delayed delivery of materials, parts and supplies were experienced by 85% of firms.
Materials Prices Up
A majority of respondents said they had experienced a dramatic price increase in more than one material or category, but 71% of contractors said they are experiencing project delays or disruptions, mainly due to shortages of materials and equipment or parts.
"That's only a slight improvement from the 78% who reported such problems in our October survey," Simonson said.""It's clear the economy still has a long way to go to sort out these kinks, as nine out of 10 firms that are incurring such delays, site backlogs and shutdowns at domestic producers such as factories, mills and fabricators and half of our respondents also blamed delays, backlogs and shutdowns on foreign producers of materials."
More than three-fourths of firms reported having at least one one project canceled or postponed in the past year.
Ali Mills, executive vice president of Greensburg, Pa.-based Plum Contracting, a highway contractor, detailed her company's journey back to work last year, since Pennsylvania was one of only a few states that did not initially designate construction an essential industry, and shut down jobsites as a result.
"We fought so hard to get back to work and say we could provide a safe environment outside," Mills says. "We fought to let our government know that we could continue to work safely, but with that being said, we ended up coming up with a 51-page safety program ourselves. We spent hundreds of thousands of dollars putting in extra restrooms and sanitizing stations. We made our own hand-washing stations."
Mills said that while some regulations have loosened in Pennsylvania and the other states where Plum works, all of the company's jobsites are still operating by that 51-page safety manual. She also said the pandemic changed how firms bid and investigate projects. Where Plum could previously send eight employees to visit a potential site and house them in two or three hotel rooms, now the company purchases individual rooms for each employee out of an abundance of caution.
Both Mills and AGC are asking Congress and the Biden administration to pass a robust infrastructure plan, but AGC officials also reiterated their opposition to the Protecting the Right to Organize (PRO) Act, which has already passed the Democrat-controlled House and is scheduled for debate in the U.S. Senate.
"About a third of our members are union contractors and proudly work with and have great working relationships with organized labor," said Brian Turmail, vice president of public affairs and strategic initiatives at the AGC. "Our problem is that the bill is not as advertised and actually makes some very significant and fundamental changes to established labor practices and contracts and frankly, some for workers. Among the things that the measure allows would be secondary strikes and boycotts, meaning that organized labor could picket against any firm, even a firm that's not directly involved in the practice [that is] organizing the drive or anything else."
Turmail said a hospital construction project could be a situation where contractors working on the project could see themselves picketed against as part of a labor dispute involving hospital workers. Or that contractors could see themselves picketed against due to a subcontractor or supplier labor dispute.
"What that will do is force a lot of people who don't stand to directly benefit from that fight to be out of work as they sort of honor the picket line and, of course, wait for the dispute to be resolved," Turmail said.
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