prepare for fluctuations in construction
How the Construction Industry Impacts Plumbers, Electricians and HVAC Contractors
Many independent contractors rely on construction or renovations to create demand for their services. While you can certainly earn business through repairs and maintenance services, larger projects for new installations and upgrades can result in greater and steadier profit.
But, your business is directly impacted by changes in the construction industry. Cyclical highs and lows, technology advancements and employment changes can create unique opportunities and challenges for independent contractors and small businesses like yours.
Cyclical Construction Industry Determines Contractors’ Demand
Because of seasonal and economical fluctuations, the construction industry goes through cycles of high and low demand periods. Since contractors are needed for electric, HVAC and plumbing needs in any renovation or new construction, this then creates a cyclical effect on your business demand, too.
For instance, recent research shows the construction industry reached a cyclical high in Q3 of 2016, reaching $317 billion. Highs like this spur new development proposals and construction plans, and with new construction comes the need for electric, HVAC and plumbing implementation.
An expanding economy and job creation, and favorable seasons like spring, or summer often result in more demand for construction. On the other hand, economical constraints can lead to cyclical lows. Increases in unemployment or a poor economic picture signal little to no need for new construction. Without a need or demand, you may experience slow downs in your contracting business.
Construction Industry is Reconstructing Itself with Innovative Tech
The construction industry is historically slow at adopting new technology to streamline much of their processes, resulting in poor productivity and planning. However, now more companies are implementing digital tools and software to help simplify portions of the construction process. As a result, contractors, too, are turning to new tech and hardware solutions that can boost their productivity.
Tools like virtual reality (VR), simulation, augmented reality (AR) and Building Information Modeling (BIM) can help your business and developer partners see specifically where work and services need to be done. These technologies can also help identify any physical barriers or existing errors before beginning a project, ultimately providing you with the ability to provide more accurate pricing and labor estimates.
Similarly, new embedded sensors in the structure can help detect deteriorations or where maintenance is needed. Advancements like these can enable you to be more efficient in your planning and production.
While these tech tools come at a price, research shows that in 10 years full-scale digitalization will lead to a huge annual global cost savings. For instance, non-residential construction savings are expected to reach between $0.7 trillion to $1.2 trillion in the design & engineering and construction phases. A total of $0.3 to $0.5 trillion in the operations phase will be saved, improving productivity among contractors.
Employment Challenges Result in Development Slow-Downs
The construction industry often experiences cyclical labor needs. The job, like contractor jobs, can be demanding, have irregular hours and less-than-ideal working conditions, making it difficult at times to recruit and retain. Downturns in employment can lead to an overall slow-down of development and productivity, resulting in a prolonged waiting period for contractors.
Newly released data shows that construction employment isn’t anticipated to grow this year. In fact, its yearly peaks haven’t been all that impressive. Recent drops in employment numbers make it difficult to expand development, which in turn provides fewer opportunities to contractors.
To protect yourself and your business, consider hiring temporary personnel to fill business needs during busier seasons—typically spring and summer. Temporary contracted employees should still fulfill the normal onboarding requirements, such as necessary trainings on equipment and procedures, and business orientations.
It’s important to note that although someone may be a temporary employee, they are still protected under most fair-employment laws. This means businesses must offer certain benefits, such as health insurance, to those who work more than 30 hours per week. Similarly, your business will still be required to carry workers’ compensation coverage for temporary employees.