Things that happened for the first time seem to be happening again. “Where or When…”
–Rogers and Hart
With the sight of new calendars constantly popping up on screens everywhere, I am compelled to roll out my annual practice of summarizing the past year and, more to the point, projecting what the upcoming year (or era) might bring for the construction industry, and particularly for commercial drywall estimators and project managers.
I focus on the term “era,” because it dawns on me that we have reached a rather significant milepost in the passage of our collective experience, as we close the books on the quarter-century mark beyond the millennium.
Upon my mulling over what has come to pass in the recent year (or years), the standout trend in our business seems to be “the same old, same old.” That is to say, the most noteworthy aspects of the current conditions in our business are the mere continuation of former issues that either plagued or boosted us in the past (except for a few catastrophic disruptions, such as a global pandemic).
The post-COVID 19 industry indicators have been strikingly similar over the past several years, to the point of being rather repetitious: housing deficiencies, labor shortages, volatile material costs, and general inflation have been, and still, are the most remarkable trends in today’s economic outlook for the construction profession. A few fleshed-out examples confirm this.
Labor Shortage
As stated in previous columns, a general labor shortage negatively affects labor availability in the construction sector. Statistics confirm that there is a marked deficiency in worker-to-job ratio. Specifically, there are currently only 92 workers for every available100 jobs in the United States. More pointedly, this impacts the construction sector, as demand increases, and availability drops.
Causes include lack of participation in the younger incoming work force, increased early retirement of skilled tradespeople and a recent halt on the flow of immigrant workers. This double-edged sword of expanded demand versus reduced availability is certain formula for increased cost for wages soon.
Supply-Chain Disruptions and Inflated Prices
The impairment of material delivery continues to plague the industry, as availability and transport of the lifeblood supplies of commercial drywall—sheetrock, steel framing and joint compound—continue to be diminished by market volatility. Increased tariffs are certain to have a negative impact on these supply chain issues. This kind of instability creates a domino effect, as unpredictable cost leads to price increases and extended project schedules.
All this feeds into general inflation, as fluctuating material costs create an unstable environment for budgeting and estimating, making it especially difficult to quantify pricing between the bidding phase and actual procurement. “Bidmeisters” are caught between a rock and a hard place, with a choice between holding firm at current prices, or projecting what the likely reality will be when the dust settles.
Projected Non-Residential Growth
Another potential issue relating to the foregoing obstacles mentioned concerns growth and financing. Non-residential growth in the near-term is determined to be positive, but nothing to write home about: 1.7% in 2025 and a projected 2% in 2026, with health care, education, and public projects being the top three (as usual).
The biggest culprit for this rather ho-hum outlook seems to reside with interest rate, which are at a decade-high of 5%. This increase translates into higher borrowing costs and stricter lending practices.
Conclusion
Admittedly, the forecasted outlook regarding the commercial drywall portion of the industry seems mediocre at best. Nothing to get too concerned about, but nothing to get excited about, either. And so on, and so forth, repeatedly.
But these predictions are based on averages and generalities that do not necessarily reflect the potential breakout of certain sectors in our business. Of course, I am alluding to the imminent surge of growth potential that will inevitably occur with the emergence of artificial intelligence (AI) and the certain advantages that will befall those who can adapt to the challenges and demands that it will present.
I am confident that a continued line of mediocrity is not in the cards of astute “bidmeisters” and clever project managers, and that the “same old, same old,” is not our fate.
Vince Bailey is an estimator/project manager in the Phoenix area.
