For the past year or so, I have written a number of editorials regarding the economic conditions of the construction industry. To the point that I contemplated putting an official hiatus on any editorials related to the economy. However, the topic keeps popping up and it's taken on a new life in the form of a rhetorical question: What's going to happen next in the construction industry?
The question becomes rhetorical because there is almost no correct answer as every response varies depending on who you ask, when you ask, and even where you ask this question—the latter reflecting different economic construction conditions within various parts of the country.
At the most recent CEO Forum held in late July and hosted by the American Society of Concrete Contractors, St. Louis, one speaker addressed the question suggesting that construction levels won't see significant growth until 2015. In his presentation “The New Normal,” Gary Allhiser, a management consultant to the construction industry for the past 35 years, suggested the worst is yet to come—quite an eye-opener for a roomful of contractors early on a Saturday morning. He went on to discuss strategies for surviving the next few years and how contractors must learn to accept the fact the construction industry may be mired in its current mode for a few years.
Also at the CEO Forum, a panel discussion amongst general and concrete contractors took place, providing an insider's perspective on the current construction marketplace. In general, panelists revealed that revenue has been down and as a result they have diversified to become involved in additional revenue areas. The panelists also agreed the industry is not out of the woods yet. One issue that is expected to impact that segment of the market in the coming months is the commercial construction financing fallout. Much like the residential market, foreclosures are going to impact the commercial market in a profound manner in the foreseeable future.
Comments were similar from attendees at Mt. Vernon, Iowa-based Concrete Foundations Association's Summer Convention, which was held in early August, as attendees wondered about the direction and future of the construction industry. Also, the threat of a double-dip recession provoked concern among contractors, many of which were busy in the summer months but have wide-open calendars for the fall and winter.
The truth of the matter is the construction market is going to fluctuate for many months to come. The end result is a game of survival of the fittest. Contractors that fight their way through the stagnant construction marketplace will see profits soar as pent-up demand for residential and commercial properties increases. Other contractors will be forced into consolidation, and a number will be forced to shut their doors permanently.
Like walking a tightrope in concrete shoes, the industry is unstable and unpredictable.
We may never be able to accurately answer the question of “what's going to happen next in the construction industry?” but until we know, we should never stop asking.