Reconstructing the Construction Industry
Posted on June 2, 2014 | Posted by Joseph Fazzio Blogger
The construction industry has been tumultuous over the last several years. Possibly the hardest struck sector of the economy during the recession, construction companies had to face undesired “right-sizing” and equipment fleet culling. Lack of demand turned once-giant companies into small-scale operations in less than a year, and teams across the country had to rescale to keep profit margins up during a greatly extended off-season. However, over the past couple of years, construction companies have been experiencing a resurgence, slow though it may be. The industry is finally stabilizing, and the coming years may seem them restored to the economic powerhouses they once were. As demand returns and companies grow, it is finally the right time to begin expanding employment and equipment fleets once again.
Wrecking Blows of the Tool-belt Recession
The economic recession caused the shrinkage of most of the nation’s large construction teams seemingly overnight. Referred to as “the tool-belt recession,” the impact on the construction industry saw total jobs shrink by 38% between 2006 and 2010, reaching an unemployment rate of nearly half of all construction professionals in the years to follow. While the staggering numbers were grim enough themselves, the rate was even further skewed by the large number of self-employed construction workers who didn’t show up on payroll, resulting in even higher, unreported unemployment figures. It didn’t help that most construction companies came in the form of small businesses, another extremely hard-hit sector of the economy during the recession.
Spiking unemployment rates didn’t just hurt company employees, though. Company heads and foremen found themselves needing to shrink their equipment numbers as they no longer had a workforce to match them or the demand to utilize large equipment. Revenue cuts resulted in slashed budgets that forced many construction companies to sell off their fleets in order to remain afloat in the economic storm. Only key employees, particularly skilled machine operators, and equipment were kept by construction teams in hopes that the industry would correct itself as America clawed its way back from economic disaster.
While several economic sectors were granted massive governmental bailouts, the construction industry saw no such love. Amidst the rampant stimulus programs, skilled laborers had to fend for themselves, finding their own ways to stave off collapse in a rapidly shrinking market. Some contracting teams took to petitioning for similar programs to limited or no success. Others implemented their own plans for weathering the storm, living to fight another day.
Though crippling at the time, the spirit of modern rugged individualism is beginning to pay off today as the industry rights itself. Survivors of the economic turmoil are finally seeing the light at the end of the tunnel as demand for projects returns and the industry begins to grow again.
Hope on the Horizon
For the first time in years, the construction industry is experiencing a revitalizing surge, growing almost evenly throughout the country and across each sector. Though still far from pre-recession figures, the industry has been making steady progress toward sustainable growth and higher profits. As the trend continues, many analysts – and contractors themselves – are expecting continued growth through the latter portion of this decade.
The recent stabilization of the housing market is expected to have a significant impact on the construction industry, increasing job demand in the residential sector. As the economy as a whole quickens, construction projects are coming back into the spending range of both real estate developers and average citizens. With increasing population over the next several years and increased development budgets, housing construction is projected to rise steadily into 2020. As older generations reach their peak house-buying years, growth will continue, driving industry profits and employment higher.
Deteriorating older buildings will also drive construction growth this decade. A healthier economy has instilled a a willingness to engage in restoration projects in both the private and public sectors. Increased faith in spending in the stabilizing economy will lead to the funding of private restoration jobs as well as governmental infrastructure projects. Construction jobs are expected to go up 19% by 2018, growing faster than any other post-recession industry. With an economy that’s growing stronger with each passing month, bright days are finally ahead for the construction industry.