The Future of the Construction Industry Copy
Posted September 6th, 2024
America was built upon the foundation of freedom seekers. Our forefathers were able to create this country from their bare hands, paving out the roads to begin their journeys, building the homes to house their families and constructing the buildings that became their towns. The America we look back on was beautiful, intricate, and strong. As generations have gone on, our culture has evolved. Technology has advanced our world, expensive material costs outweigh the quality of materials used, and most importantly, the reduction of skilled, motivated and passionate people in the workforce required for America to continue building has dramatically impacted our world! With the next generation of youth reluctant to get their hands dirty, and nearly 40% of the current construction workforce predicted to retire in the next decade, we have a huge labor shortage crisis on our hands. Without construction workers, how will we solve traffic problems, build up new infrastructure to support growing populations, or repair homes after catastrophic storms damage cities? Is the future of the construction industry destined for destruction or prosperity?
No one has a crystal ball, but if we look at statistics, construction projects around town, or talk to young students exploring their future career, the answer may be scary, BUT with some changes there is an opportunity to change the tides and build America back up again!
1.) We need to work together to help change the perception of what a career in construction is really like
2.) We need to work with business partners to make building costs more affordable, but do so without jeopardizing quality craftsmanship and materials, and
3.) We need to embrace technology in a way that helps us drive efficiency and sustainability for the future!
The construction industry, for many, is viewed as a “second” place option they must go when they failed on a “traditional” pathway, or that it is a “less than optimal” line of work, somehow less noble than that of a college-educated person in an entirely different field. The truth is, they are wrong, and we need them to know that. The construction industry is a place the smartest and most aspirational people should gravitate to. This industry has more, or as much, to offer than any other industry. After all, where else can you enter a workforce with a clear path to making a 6-figure salary, transition to any aspect of business, or even in the same role but to a larger company, or start your own business to perform the work you have learned? The stories told about the construction industry oftentimes paint an incomplete picture. Telling the truth about this industry, that this career is a pathway to the modern “American Dream.” This American dream spirit will hopefully always imply a way for Americans to achieve success, through hard work, opportunity, but while “Marriage, owning a home, and having children are lower priorities than they were in the past. Being happy and fulfilled and having the freedom to make significant life decisions top the list of important elements of the American Dream of today’s young people.1” Attracting the new generations to this dream through construction will help bring itself back and at the same time attract the next generation into prosperity to ensure growth in the future of the construction industry.
In order to maintain the building demands our culture has placed upon us, we are in dire need of retaining and recruiting the next generation of workers to continue rebuilding America. We need to focus on educating, training, and attracting people to the construction world. We need them to know how this career path can benefit them AND impact the world in which they live. We need to talk to them about how much money they can make at every level or position. We need them to know what it looks like to have a career path in construction – how they can transition it from laborer to manager to executive to owner. We need to tell the truth and reverse the stigmas associated with failing construction businesses. The only way they can see this is if we join together and share the stories and fruits of their labor. We must talk to other people about the good work you do, bring young people out to the job sites, let them test drive the excavator, and see the world from the roofline of the skyscraper that has been erected. We need people outside of construction to do their part too!
Next, we need to blend practices of the past, which gave the construction world a solid foundation to build upon, where pride went into everything that was touched. Don’t you agree that buildings built 100 years ago have a different look and feel compared to what we see today? When I pass by our courthouse downtown which was started in 1899, I am still touched by its beauty, radiating in formality, simplicity, order and tradition.
It was the effort and labor of construction workers that foster all of this history that still stands today. As we look at growing cities, new structures seem to be going up as fast as possible and many look like a standard box, some being complete eye sores. Moving forward, we need to combine tradition with modernization in order to continue to prosper into the future. It is no secret that the cost of materials and the speed at which structures need build is a major factor affecting this, but it can be overcome.
We need consumers, developers, environmentalists, lenders, banks, elected government officials, and of course developers to be proactive and change the expectations. We must stop just trying to mass produce buildings and place new infrastructure with the cheapest and lowest quality materials, not to mention the design and architecture of the structures and buildings. It would be impossible if construction companies, developers, and architects refused to change their ways, but if they are willing to be strategic and use modern materials, it is possible with a technique called “retrofit architecture.” Blending the old with the new, ultimately sustainably supporting our American legacy. A fantastic example of this can be seen in NYC with Alpolic Metal Compositie Materials, which were used in a new NYC wearehouse project in the Chelsea neighborhood.
“The Warehouse project has stayed true to the heritage of the building while infusing elegance and modernity. It is a marvel and a true study of mixed material use that has created a new icon in New York’s Chelsea art district. It stands as proof that bringing older buildings into the modern era doesn’t require a total tear-down. Retrofitting can often provide a fresh new life at significant cost savings. The goal was to maintain the historic integrity of the original structure while creating an environment inspired by innovative technology and materials, designed to support a modern way of living and working.2”
As you look around different cities and towns across America, the historic buildings look vastly different than most of what is built today. The buildings and infrastructure of the past have definitely weathered some storms, but they all seem to stand the test of time better than some of the eye sores often built today. I know, I know, easier said than done, especially since higher quality typically comes at a significant cost, and reality proves not everyone can or will pay the premiums. Which brings us to another potential challenge for this industry in the future, inflation. This obviously will impact every other industry, and is not just unique to construction.
As we discuss rising costs, controlling prices and decent interest rates, the economy plays a huge part in this, and it is hard to control. Construction contractors are then impacted by the bidding process, which also has a direct correlation to business cash flows on projects and profit margins to keep them afloat. With so many drivers affecting inflation within the construction world, the future will be dependent on elected officials both at the local, state, and federal levels that will help prevent inflation from rising. There is no crystal ball or safeguard for this, so contractors should plan accordingly for the future.
One thing to focus on for the future is to ensure you don’t place all your cards in one basket when it comes to suppliers. Focus on building strong and trusted relationships with multiple suppliers, so you can expand your network and have options in challenging times. The other thing to do is ensure you have strong records of your financials and cash flows. In fact, according to SCORE, “82% of all small businesses fail due to cash flow problems. When money gets tight, paying yourself, your bills, the payroll and other financial obligations can be extremely difficult. This is why companies of all sizes keep a close eye on cash flow, or the net cash and cash equivalents currently flowing both in and out of your business. 3” When money gets tight, paying yourself, your bills, the payroll and other financial obligations can be extremely difficult. This is why companies of all sizes keep a close eye on cash flow, or the net cash and cash equivalents currently flowing both in and out of your business. Mobilization Funding’s entire business is set up to help construction and manufacturing contractors stay cash flow positive. There is a plethora of resources and a free online cash flow tool to keep track of all your individual projects cash flows. In keeping strong records and understanding exactly what cash is moving in and out of your business, it will help you make informed decisions like which projects to take on, and which ones to say, “No” too. The future health of the construction industry will be dependent on these businesses staying afloat. Additionally, with high interest rates and inflation rising it’s becoming both more challenging and more necessary to secure funding – not a great mix huh? As a result of this contractors are taking on projects where their margins might not be as high or they don’t have the best cashflow structure, but they think winning a bid will help put more money in the bank. This strategy is actually a recipe for disaster, as not taking into account the costs of completing those projects will leave them in the red, well into the project and trying to dig themselves out. Strong records of financials and thoughtful selection of the projects they take on based on their cash flow situation will help make them bankable in the future. Mobilization Funding is structured precisely so that our loan programs provide funds according to the contractor’s cash flow cycles. Money is provided when gaps in cash flow appear and repaid back when the contractor is paid, and the cash flow is positive. Contractors having a strong grasp and understanding the their financial structure and cash flow cycles of their projects will help sustain the industry and defy the odds of failure for the future to come!
Finally, the construction world must be able to embrace and utilize technology to increase efficiency and find more sustainable ways of building that will also ensure protection of the environment for the next generation. One way that technology is helping to make construction more sustainable is through 3D printing and prefabrication. “3D printing allows for components to be printed directly from digital models, eliminating the need for traditional manufacturing processes. This not only reduces the amount of energy and resources used in production but also increases accuracy, leading to fewer errors and less waste in excess materials. Technology will help play an important role in creating new materials to aid in construction materials. Marsh says, “Expanded use of robots and machine-assisted applications can help revolutionize the construction sector.4” Robotics don’t have to replace our skilled workforce, but they can help make them more precise and efficient. For example…. What if all of the younger generation knew that Bulldozers, Excavators and other Heavy Equipment can all be operated with GPS and Robotics now to ensure that what they are trying to accomplish is done within a matter of inches and even millimeters. That dirt in one very precise spot can be picked up and dropped in another very precise spot at certain and specific grade that was determined in the office. Don’t you think those facts might be more appealing to the younger generation when they are considering a role in the construction industry? Technology has opened countless opportunities for making construction more sustainable in the long term, by streamlining processes and utilizing fewer resources than ever before possible. This will dramatically affect the way we continue to build when needed.
Whether you are in the construction business or not, everyone can make an impact! It is time to do your part! In doing so, America will have the talent and manpower it needs to embrace technology in construction, to seek out sustainable methods to help protect the environment, to value quality materials over cost or quantity, and help preserve the greatest country on Earth! It will give the next generation the opportunity to work hard to create something new, to reap rewards, and to achieve the American dream this country was founded upon.
References:
1. (Wilson, 2023 https://www.closeup.org/for-young-americans-the-american-dream-resonates-differently/).
2. ALPOLIC. “Can Classical and Modern Architecture Coexist?” https://www.alpolic-americas.com/blog/can-classical-and-modern-architecture-coexist/.12/6 /21. Aug 7, 2024.
3. Sutter, Brian, SCORE, The #1 Reason Small Businesses Fail – And How to Avoid It, https://www.score.org/resource/blog-post/1-reason-small-businesses-fail-and-how-avoid-it.
4. Plan Radar. “ Technology is Paving the way for Sustainable Construction.”
https://www.planradar.com/ae-en/technology-is-moving-construction-towards-sustainablity/#:~:text=3D%20Printing%20and%20Prefabrication,less%20waste%20in%20excess%20materials. Jan 2023. August 7, 2024. the construction industry as a whole.