Over the past three years, contractors in the United States and abroad have encountered a variety of difficulties, including the COVID-19 pandemic, supply chain problems, labour shortages, and rising material costs. As contractors navigate the challenges of 2023, they face tremendous headwinds caused by these and other difficulties. This article examines the challenges contractors are likely to continue to face in the second quarter of 2023, including labour shortages, supply chain issues, and delays in infrastructure funding.
Speed of Infrastructure Investment
With private sector employment opportunities dwindling, contractors are turning their attention and hopes to public-sector opportunities in 2023. The AGC’s survey report shows that contractors have high expectations for public funding in 2023, with the Infrastructure Investment and Jobs Act (IIJA) expected to provide the bulk of that funding. However, delays in funding disbursement may be partly due to misunderstandings among states and government organizations regarding spending regulations, particularly the IIJA’s Buy America obligations.
Labour Shortages, Both Skilled and Unskilled
Since 2020, the construction industry has been plagued by a widespread scarcity of both experienced and unskilled personnel. Even contractors that are preparing for a windfall of business may struggle to appropriately staff upcoming jobs. According to a recent model created by the Associated Builders and Contractors (ABC), the construction industry would need over a half-million additional workers to meet project demand in 2023 and beyond, on top of its usual recruiting rate.
Cost and Materials Availability
Although the price of some building supplies decreased in the latter half of 2022, overall expenses are expected to continue to increase in 2023, albeit at a slightly slower rate. Material costs remain a top issue for over 75% of contractors, according to the AGC report.
Take Away
Contractors are facing numerous challenges as they navigate 2023, including labour shortages, supply chain issues, and delays in infrastructure funding. To meet the growing demand for construction projects, contractors will need to find creative ways to overcome these challenges, such as by investing in technology, training programs, and partnerships with schools and training centers to attract new talent to the industry. By doing so, contractors can position themselves for success in the years to come.