Think back to a year ago – the construction industry outlook was generally optimistic. The economy was on the rise, and there were opportunities to bid work and grow. A few short months into 2020, the stock market plummeted, most of the country was in quarantine, and the future was unknown.
The pandemic has forced many construction companies and their customers to make contract modifications, including cancellations, delays, and increased construction costs. A recent survey of construction companies shows a challenging 2021 for the industry. Over half the companies included in the survey expect it will take more than six months for business volumes to return to pre-pandemic levels. Click to read the Minnesota Construction Outlook survey results.
2021 CONSTRUCTION INDUSTRY OUTLOOK HIGHLIGHTS
- The pandemic has highlighted the need for companies to invest in technology to increase their efficiency and comply with COVID-19 safety protocols.
- Industry revenue is expected to decline 6.3% because of the COVID-19 pandemic.
- Optimism remains high for work related to the state’s $1.8 billion bonding bill.
- Labor will continue to be a struggle to find and retain.
- Material and labor costs are expected to increase, which will lead to decreased margins.
- Margins will continue to be tight as more companies bid on fewer jobs.
- The housing market is expected to stay busy, as inventory levels have not improved, and home improvement projects and remodels continue to grow with more people spending time at home.
With 2021 looking a bit uncertain for most in the construction industry, business owners should consider developing an economic downturn plan. Revisiting efficiencies, strengthening your balance sheet, restructuring debt, and controlling overhead costs are all ways to help recession-proof your business. If you want to know if your business is well-positioned for the uncertainties that lie ahead, the Smith Schafer Construction Industry Group can help.