By Michael Copp, Executive Vice President
We produced another PHCC Contractor Sentiment survey this spring. 92% of respondents were plumbing contractors and 55% were HVACR contractors who responded to this survey, albeit some plumbing contractors also provide HVACR services. With the economy growing by 6.4% in the first quarter, according to CNN on April 30, 2021, there is greater optimism and increased consumer confidence in this economic recovery. “The Conference Board forecasts that US Real GDP growth will rise to 5.0 percent (annualized rate) in [the first quarter] and 6.0 percent (year-over-year) in 2021.” (Retrieved from the World Wide Web on April 30, 2021, here). FMI Advisors projects steady growth in construction spending in 2022 after a slight dip this year in most industry sectors except for construction of data centers, educational, healthcare and public safety facilities. FMI Advisors projects segment performance for sewage and waste disposal to grow by 2 percent at $27 billion, water supply spending up by 9 percent at $20 billion and power increasing by 1 percent at $120 billion. (Retrieved from the World Wide Web on April 30, 2021, here).
While there are tailwinds as noted above and in the survey results below, there are also some headwinds contractors shared:
- Respondents rated the continuing impact of COVID on their business as being a low or medium impact.
- Top challenges include not operating with full staff, increased operating costs due to increased needs for PPE and jobsite sanitation, addressing employee and customer health and safety concerns, and customers holding off on projects, replacements due to economic concerns. Other concerns continue to be that materials are hard to get. Contractors cited difficulties with shortages and huge price increases, getting HVAC equipment, and slow supply chain.
- Over half of respondents indicate they are not planning to apply for a second draw PPP financial assist.
- Just under half of respondents indicate that manufacturers and suppliers have been highly responsive to their needs. Concerns include supply chain shortfalls and commodities volatility, significant supply disruption and parts are not available when promised, hard to get items… some heaters, AC, garb. disposal and water heaters, getting touchless faucets and flush valves to complete owner desired renovations.
- The majority of respondents indicate that supply chain disruptions are due to delays in shipping materials, cost increases, shortage of construction materials, equipment, or parts, and manufacturer training disruptions and lack of experienced new employees.
- Most respondents indicated that COVID has impacted their workforce most because of employee absenteeism, Increased anxiety, difficulty finding technicians, and reluctance for workers to take mandates seriously when they are working in spaces together.
- Respondents are mitigating safety risks for employees and clients by screening employees as they report to office or job site, social distancing on construction jobs, mandatory requirements to use adequate PPE, increased disinfection of high touch areas, complying with all CDC guidelines, increased communication with customers about the importance of safety protocols, following the General Contractor’s requirements on the job, and encouraging Employee Vaccinations.
- Respondents ranked concerns they have for their business and working environments over the next six months, including the increased cost of doing business (safety equipment, materials, insurance), continued challenges finding qualified employees, potential recession, and increased risk (safety, health, lawsuits), commodity price increases in copper and steel affecting our PVF costs as well as our coil and sheet steel, and procuring materials and shipping delays.
- Respondents indicated that additional resources that PHCC might provide include supporting the easing of restrictions and opening up the country to in person meetings and training, advocating for vaccine eligibility for workers and promoting the adoption of all public health guidelines. They also indicated they were interested in assistance like educating the public about respecting our safety, providing easy-to-use recruitment tools, advocating for preferred interest rates for loans, and continuing to market to the general public about the [value of the] trades.
With the unemployment rate at 5.3%, a continuing concern for contractors is the challenge of finding qualified workers — and certainly the recent pandemic did not help this pervasive problem. Patrick Jones in his March 2021 article, What Workforce Challenges Are Ahead for Key Construction Industry Segments?, reports that “pandemic-related disruptions experienced last year [and] the lingering effects of these setbacks will continue to unsettle the industry’s workforce for much of 2021.” (Retrieved on the World Wide Web on April 30, 2021, here) Fortunately, it is expected that construction projects delayed in 2020 will slowly restart to include water infrastructure and industrial projects with the push for a large-scale multi-trillion dollar Infrastructure spending package over eight years. But all of these efforts presume an adequate recruitment of skilled workers given that as Jones (2021) points out, “the industry has seen even more experienced workers retire from the workforce during the pandemic.” (ibid) Some recruiting tactics offered by Jones (2021) include:
- Look for talent over experience. “Employers may be better off hiring more candidates with the right aptitude, motivation and drive who can be trained in construction.. [and] retention rates typically improve when hiring and developing new talent.” (ibid)
- Promote career growth potential. “Prepare a company overview document that gives … candidates detailed insight into the company… as well as forward-looking insight into company plans and how their career progression fits in.” (ibid)
Jones (2021) notes, “The builders and contractors that will secure and retain workers are those that look at the labor pool in new ways, and are strategic about their talent acquisition strategies.” (ibid)