COVID-19 reached North America in January 2020. As of May 2, the virus is found in nearly every nation around the globe, according to the US Centers for Disease Control (CDC). From local governing bodies to state and province governments, all the way up to the federal governments of both the US and Canada, strict safety precautions have been promoted - and in a few cases - enforced.

There's no question that COVID-19 is affecting the construction industry across North America, and will continue to do so. While none of us here have the magic crystal ball to explain every potential effect of the pandemic, we see several effects at every level and facet of the industry.

Here we'll look at ways the pandemic affected North American construction in terms of:

• economic impacts
• employment, jobs & hiring
• supply chain & procurement struggles
• plus changes in the PPE market as they relate to construction

Ultimately, we know that much of what we write here is speculation. But we do hope it's helpful.

Economic Impacts of COVID-19 on the Construction Industry

Robert Dietz, chief economist at the National Association of Home Builders (NAHB), predicts that COVID-19 will cause a sharp, but short, economic slump. Second and third quarter 2020 GDP growth will be markedly negative, and possibly the worst performance since 2008, during "the Great Recession." But he believes the numbers will improve by year's end.

Most building construction and road jobs were significantly delayed during the pandemic. Some states considered construction to be essential, but work was impeded by social distancing requirements. Today, many governments are beginning to lift restrictions and crews around America are getting back to work.

• However, some governments have been tightening their hold on the construction fields. Ontario Premier Doug Ford took a powerful grasp of the province's construction business and pared down the construction sector significantly in April, 2020.

As it stands today, many job sites are temporarily shut down across the entire North American continent, and the number is growing. On April 6, Sound Transit halted the largest transit expansion in the United States due to the pandemic, and closed dozens of job sites.

We can't predict the moment when your crews will be able to work again, but we know the exact dates will vary by region.

• New York City area jobs might be the first to relaunch, as the virus hit NYC hard and fast, and may burn itself out there first.
• California construction crews might also get to work sooner, as medical professionals believe we're seeing a sort of herd immunity in "the sunshine state."

Areas that have effectively slowed the spread of COVID-19 may be under social distancing and isolation orders for longer periods.

However, there is a silver lining, as we suspect new hospital developments and the potential for unprecedented growth in the medical fields in the next few years.

Coronavirus Impacts on Employment, Jobs & Hiring in the Construction Industry

According to a report published in March 2020 - by the US Bureau of Labor Statistics (BLS) - unemployment in the US has jumped significantly due to COVID-19 and was about 4.4% at the time of publication. Current statistics are difficult to qualify, but some sources claim US unemployment may be as high as 13% as of April 8.

• While we never look forward to laying-off our most talented employees, the bright side of this situation is a large, ready and willing workforce available as stay-at-home orders are lifted.
• Employees are eager to get back to work, though hiring organizations may need to be creative to attract and retain top talent.

Competition among hiring organizations will be fierce! So plan ways to attract and retain workers. A tight economy means employers may not be able to provide high wages like those we were paying in 2019. It's time to consider other work-perks and benefits like

• comp time
• paid time off, or paid family leave
• titular advancements and the like

Your recruiting efforts will be hugely important for construction companies, as experienced construction workers will be jumping on the first job that puts them to work.

• However, any organization must continue to follow health and safety recommendations as they evolve - and put employee health first.

As crews get back to work, construction firms will likely face considerable hiccups in the supply chain. So that's something to plan for, too.

Supply Chain Upheavals Likely to Affect Construction Industries - Oil & Steel

During the COVID-19 pandemic, supply chains broke, and international trade essentially halted for many of the raw materials needed in the construction fields. We believe early prices for oil will likely remain rather low for a time, and that steel will surely skyrocket soon.

Oil Prices & the Construction Industry

Crude oil prices affect nearly every aspect of construction: from raw materials used for paving roads and parking lots to burner oil, to the cost of gasoline and diesel needed to run large equipment. At the time of writing, the US oil market was still volatile, as a crippling price war between Russian and Saudi oil sources combined with COVID-19 pandemic struggles caused the oil market to tank.

• Oil prices remain quite low but are expected to grow over the next months.

Steel Prices & the Construction Industry

You're surely aware that steel prices play a tremendous part in the construction industry's ability to negotiate bids and fulfill construction contracts.

As we look back at the US - China Trade Wars that caused steel prices to surge over the past few years, we wonder if the construction industry will be breathing a sigh of relief as steel costs drop when supply chains shore up. Or, will the prices of this essential raw material skyrocket, as more stringent laws on imports in both Canada and the US put a chokehold on steel supply?

• Only time will tell. But our best advice is to prepare for steel to skyrocket.

We must also acknowledge that even the largest North American construction companies use 30% to 80% of Chinese-made materials at job sites. Your procurement teams may feel the pause, as they try to source faucets, lighting fixtures and small appliances and prices for those goods will probably jump.

Furthermore, know that the supplies of construction-related personal protective equipment (PPE) are affected, too.

The PPE Market After Coronavirus May Be Challenging

Chances are, your purchasing departments will have their hands full procuring PPE as the dust of COVID-19 settles. PPE manufacturers, like 3M for instance, usually manufacture several types of PPE and serve customers in various segments.

• PPE manufacturers and distributors are likely focusing more on the products needed immediately in the medical professions, and fulfilling those backlogged purchase orders first.

While certain PPE items favored in the construction industries - like hard hats - may still be available for a time, once they're gone, it may be months before PPE manufacturers turn their gaze towards fulfilling those needs. Construction companies should focus on a thorough inventory of the PPE they have on hand, and develop conservation tactics for the future (ie. numbering helmets, or creating equipment sign-out logs).

Our Role

At Realization, our goal is to help our customers improve project delivery. We appreciate that you took the time to read my blog. I sure enjoyed writing it! I would love to know how your projects got impacted and how you are tackling them, let me know in the comments or via messages, take care.

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