Nearly two-thirds of contractors are highly confident that demand for commercial construction will increase over the next year, however, continued concerns around labor shortages have put even greater pressure on the industry, according to the Q1 2018 USG Corporation + U.S. Chamber of Commerce Commercial Construction Index. To increase job site efficiency and improve labor productivity, increasingly more builders are turning to alternative construction solutions, like prefabrication and modularization.
The Q1 Index indicates contractors turn to innovations such as prefabricated and modular building materials to create more efficient job sites (89 percent), increase labor productivity (85 percent), drive cost savings (58 percent), and provide a competitive advantage in the marketplace (51 percent). In fact, 50 percent of contractors report their companies already use prefabricated and modular components and the number was even higher among general contractors (72 percent). Nearly two-thirds (63 percent) of contractors report at least moderate demand for these building materials.
“Access to skilled labor is a continued concern, which has led contractors to increasingly seek solutions that help offset job site challenges,” said Jennifer Scanlon, president and chief executive officer of USG Corporation. “There is significant opportunity to introduce innovations that confront job site efficiency and strengthen the industry – such as solutions that enable prefabricated and modular building components.”
Contractors in the Northeast (69 percent) reported the most frequent usage of prefabricated and modular components, compared to the South where only 24 percent indicate their companies are using these materials. Firms in the Northeast also expect to hire fewer workers—38 percent of contractors in the region expect to employ more staff in the next six months, compared with 57 percent in the South, 59 percent in the West, and 68 percent in the Midwest. Across all regions, concern over the cost of hiring skilled labor has remained consistent over the past year—nearly two-thirds (64 percent) of contractors expect these costs to increase in the next six months.
Despite labor concerns, contractor sentiment remained steady for the first quarter, as a result of strong revenue expectations and higher profit margins, with a composite score of 74.
“As we work to continually build our neighborhoods, towns, regions, and roads, as well as the workforce that supports our growth, innovation becomes a key component in advancing our country into the 21st century,” said Thomas J. Donohue, president and CEO of the U.S. Chamber. “We must invest in a skilled, competitive, motivated workforce and embrace new innovations to ensure we are able to compete on a global scale.”
The research was developed with Dodge Data & Analytics (DD&A), the leading provider of insights and data for the construction industry, by surveying commercial and institutional contractors. The full report, including methodology and graphics, is available online.