The coronavirus outbreak that has sickened more than 80,000 and killed more than 2,500, mainly in China, could be poised to affect U.S. construction firms, according to www.constructiondive.com. Government containment efforts and quarantines have slowed or shut down factories in dozens of cities and provinces, leading to predictions of a sharp drop in production of everything from cars to smartphones.
Richard Branch, chief economist for Dodge Data & Analytics, says the U.S. construction industry will not be immune to the effects of the outbreak. Commercial builders relying on Chinese-made goods or materials could experience higher material costs and potentially slower project completions.
Branch estimates building product imports from China account for nearly 30% of all U.S. building product imports, making China the largest single supplier to the U.S.
“With China’s manufacturing output declining as factories are temporarily sidelined, it’s likely that U.S. building product supply chains will be affected, with costs potentially moving higher,” Branch says.
Daniel Pomfrett, vice president of forecasting and analytics at construction cost consultant Cummings, says items such as copper, aluminum and casework are some of the key products already experiencing price increases. Steel is more unpredictable, but Pomfrett says U.S. producers of structural steel will help minimize price fluctuations.
As the spread of the virus in China begins to slow, some Chinese workers are starting to return to their jobs. However, the American Chamber of Commerce in Shanghai says even as factories reopen, they are unlikely to be fully staffed. And when production resumes, it will take time to recover as facilities work through a backlog of orders.
All these factors will play a role in determining whether construction materials prices will rise in the U.S.
“The exact extent to which they increase will be determined by how quickly the virus can be contained and how much product can be substituted from other countries,” Branch says.
