COVID-19 causes supply-chain issues for the construction industry

March 16, 2020

Contractors throughout the U.S. are seeing the effects of COVID-19 on supply chains for building materials, including shipping delays and a need to re-source products domestically, according to therealdeal.com. Those in the construction industry also are facing uncertainty regarding how long countries will be on lockdown, how crews might be affected and whether project deadlines will have to be pushed.

Two previous similar situations—the H1N1 pandemic flu in 2009 and the SARS outbreak in the early 2000s—did not appear to significantly affect construction sites, said Richard Branch, chief economist at Dodge Data & Analytics.

Still, about 30% of building materials imported to the U.S. come from China, making the country the biggest single supplier. Additionally, Branch said a large amount of raw material used to make products in other countries also originates in China, which means it could be more likely for projects to experience delays toward the end of their development timelines.

The COVID-19 virus outbreak, which was declared a pandemic by the World Health Organization, originated in China in late 2019. China’s manufacturing sector has been slowed by efforts to contain the spread of the illness, and Italy has instituted a nationwide lockdown. Firms are seeing longer lead times for products such as LED strips, glass office fronts and stone.

Clay Edwards, executive vice president and partner at Chicago-based construction firm Skender, said he has a couple of commercial projects where he had to re-select flooring that had been sourced out of China. Edwards said his clients were understanding, and he was able to source the products domestically at the same costs. However, Edwards said he can see a time in the not-so-distant future when supplies dwindle further or clients are not as accommodating.

So far, the construction experts interviewed by The Real Deal said they have not seen any immediate effects on pricing. However, current uncertainties could lead contractors to put projects on hold.

Tags: Business | Trends

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