According to the Associated General Contractors of America, construction spending to-date for the first nine months of 2018 is 7% higher than in the first nine months of 2017. And while this increase demonstrates strong continued demand for construction, the industry is still facing significant barriers, changes and potential regulations. From the announcement of Amazon’s HQ2 to the ongoing legislative debate over infrastructure to pitfalls of the labor shortage, there has been much recent movement within the industry and the rapidly changing landscape of construction can be hard to keep up with.
So, what are some key trends to keep in mind as we head into 2019? Without further ado, here are the top construction stories you may have missed:
1. Amazon chooses New York City and Northern Virginia for the home of HQ2
In a surprising twist, Amazon decided to split the locations of its much-anticipated HQ2. The decision to divide the headquarters was largely driven by the desire to prevent one city from bearing the whole burden on housing, infrastructure and transit. However, while the announcement will lead to some of the most significant economic developments in each of these cities, it will also require a significant investment in new housing and infrastructure, all of which will mean new construction. Each HQ2 comes with the promise to create tens of thousands of new jobs, but what will be most interesting is how the construction industry will expand to fit new demands amid its growing labor shortage.
2. At the heart of bipartisanship lies infrastructure
Back in February, President Trump outlined his $1.5 trillion infrastructure plan, but it has since made little progress in Congress. Infrastructure is one of the few issues both the President and Democrats in Congress agree on, but the biggest challenge they face is where the money will come from. As it stands already, the American Society of Civil Engineers gave the nation’s infrastructure a D-plus grade and says it would like at least $2 trillion more than is currently budgeted to adequately improve roads, railroads, seaports, airports, levees, damns and water and sewer systems. Despite both sides in agreement that there are significant infrastructure needs in both urban and rural areas, raising revenue will continue to pose a barrier as we near closer to a presidential election year.
3. Safety continues to be a top construction concern, but the most violated OSHA standards remain
Construction is one of the most dangerous industries to work in, hindering recruitment and retention efforts. While safety is a growing priority, there is still much that needs to be done. According to OSHA’s 2018 Top 10 Most Frequently Cited Violations List, 8 of the most violated standards were on the 2017 list and the top 4 most violated have been on the list since 2015. So, what made the list this year? In order: fall protection, hazard communication, scaffolds, respiratory protection, lockout/tagout, ladders, powered industrial trucks, machine guarding and personal protective and lifesaving equipment. These violations were compiled from October 1, 2017 – September 30, 2018, and not much has changed within that timeframe compared to years past. If the industry truly wants to recruit and retain the best talent, they will have to demonstrate they can protect them on the job site.
4. Voters head to the polls in support of transportation infrastructure
According to an analysis by the American Road & Transportation Builders Association (ARTBA), voters showed their support for 79% of the 346 state and local ballot measures in favor of transportation infrastructure in the recent midterm election. As a result, these initiatives will generate over $30 billion in recurring revenue. California also voted against a proposition that would repeal an increase in state gasoline and diesel motor fuels preserving over $50 billion for highway, bridge and transit improvements. The report by the ARTBA also indicated that Connecticut and Louisiana passed statewide measures to protect transportation funds from being diverted to non-transportation purposes. In light of the ongoing debate over infrastructure plans and funding, these election results begin to paint an optimistic future for the nation’s roads and bridges.
5. Construction activity will remain high though 2019, as will the lack of skilled labor
In 2019, construction activity is expected to remain about the same as it did in 2018, but in the ongoing battle between economic growth and tax cuts or tariffs, there are still many things construction companies should keep top of mind to prepare for the coming year. The economy is slowly starting to cool off, but this likely won’t have an impact on construction. Companies can expect significant demand and enhanced levels of activity, but they must be aware that a recession could be closer than expected – the start of 2019 will likely feel very different than the second half. In addition to potential economic pitfalls, the labor shortage remains a growing concern. According to the Associated General Contractors of America and Autodesk, 80% of construction companies are struggling to fill craft positions and this will be a problem companies will continue to face for a long time. The staggering employment numbers demonstrate that the industry has not recovered from the recession, so any future economic downturns could have immense repercussions.
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