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Challenges & Opportunities For Small Construction Companies
The construction industry has always been a major player in the US. economy. From the first buildings built, to the sprawling metropolis of the modern era; construction has provided public and private infrastructure, business opportunities and millions of jobs. It is also an industry like any other; fraught with risks, issues and successes. To say that the US. construction industry is big is an understatement. It’s an industry that rivals most others. Alongside the physical buildings, we also have the human face of the industry. This consists of workers and contractors – whether as business entities or employees – both large and small. The latter includes roofers, plumbers, electricians, glaziers, bricklayers and painters. Small contractors play an integral and very hands on function in the construction industry as a whole. In light of the industry size, there is plenty of work to go around, especially considering the demand for skilled labor. This labor shortage is one of a number of changes the industry is experiencing.
What’s Going On In The Construction Industry?
Here are some key indicators of the size of the construction industry:
• Private construction costs are in excess of $899 billion
• There is significant federal and state funding designated
• The industry’s contribution to the US. economy has surpassed $650 billion
• There are over 10 million workers in the sector
A Changing Industry
• A growing decline in skilled labor in both blue and white collar roles.
• Workers in this industry have mostly been older, with the younger generation preferring office jobs. As a result, ‘’generation Z’’- (born after 1997) – are now proactively being sought by the industry. They are often considered as best suited to take advantage of new technology, and to undergo training to fill the skills gap.
• The industry is known for being male dominated. Women only represent 9.9% of the workforce. This is steadily changing, however – as shown by the sizable growth in female owned construction firms between 2007 and 2018.
• In contrast to skills and female shortage, there is an increase in the cost of materials.This has been exacerbated by newly introduced import tariffs. The impact will mostly be on softwood lumber, steel and related manufactured products, as well as iron.
Big Opportunities For Small Business Owners
The size of and changes to the industry also come with industry related challenges. The industry boom has resulted in increased competition and shrinking profit margins. Higher material costs places further strain on industry players. Larger projects in particular are susceptible to project delays, lack of adequate financing and labor shortages.
However, in the midst of the challenges, new trends and technologies have emerged, like these:
• 3D graphene
• Self-healing concrete
• Invisible solar cells
• Artificial Intelligence
• Transparent aluminum
• Light generating concrete
• Contractor management software
• Building Information Modelling
• Application of sustainable practices
One of the drawbacks of innovation, however, is an even further rise in general costs. Nonetheless, new technologies may ultimately provide more savings for users in the long run.
Take Advantage Of These Trends
As we’ve seen, the construction industry is vulnerable to changes in labor, technology and material costs. The good news: opportunity awaits in the midst of it all. In particular, the small business owner can really take advantage of:
• Labor and skill demand means more work. The money may not always be in the big construction projects. Big projects require big investments and complex planning; there’s a lot to gain financially but also a lot to lose. In contrast, certain trades like plumbing and roofing are niche, practical and almost recession proof. These are skills in low supply and high demand. So if you are a small business owner/contractor, you may be better off staying in that lane.
• New technologies can mean more efficiency and competitiveness. Large and small contractors alike are encouraged to take advantage of new trends to boost their competitive edge.
Insurance For Insurance Companies Is Still Vital
All contractors should prepare against work-related risks. These include work-related injuries, claims for worker’s compensation, damage to equipment and claims for faulty work. Overall, however, the small contractor is well positioned to continue to reap the benefits of the construction boom, for many years ahead.
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