The Associated General Contractors of America’s 2023 Construction Outlook National Survey shows supply chain issues, material costs, labor shortages and a recession are among contractors’ top concerns for 2023, according to constructiondive.com.
Supply chain uncertainty in the industry has led to negative effects that ultimately cause higher costs and lower profits. Contractors also are less confident about private sector work as inflation and the potential for a recession continue to be an issue.
“Even when we’ve had recessions or slow growth expectations for the economy, contractors are by nature optimists,” said AGC Chief Economist Ken Simonson. “But it is notable that in nearly all of these categories, particularly on the private side, contractors have lower net positive readings or deeper negative readings than they did in previous years.”
Contractors’ biggest concern for the coming year is the supply chain issue, which causes project delays, logistical problems and rising material prices. To respond to this issue in 2022, 70% of survey respondents said they accelerated purchases after winning contracts; about half turned to alternative suppliers or used alternative materials or products; and 22% stockpiled items before winning contracts.
Labor shortages are expected to persist. Sixty-nine percent of contractors said they expect to hire in 2023 and only 11% expect to reduce their staffs. In 2022, 72% of contractors increased base pay rates more than in 2021 and about a third boosted bonuses and benefits to attract workers.
Still, 80% of contractors report they currently are having difficulty finding workers and most respondents expect those challenges to continue. Also, 83% of contractors are concerned the labor shortage and resulting inexperienced skilled labor pool will affect the safety and health of their companies’ workers.
The survey shows contractors are more optimistic about infrastructure and other public work even though only 5% of respondents are working on new projects funded by the Infrastructure Investment and Jobs Act. Six percent have won bids but have not started work; 5% have bid on IIJA projects but have not won awards yet; and 21% said they plan to bid on projects but nothing suitable has been offered yet.