One year later: Two contractors tell of Covid’s impact
By Jenny LescohierMarch 16, 2021
U.S. contractors have faced the impact of the Covid-19 pandemic in many ways over the past year, most notably in a reduction of projects, new safety protocols and severe shortages and price increases for raw materials.
At a press conference on March 11, Associated General Contractors of America (AGC) released an analysis of new data showing the impacts of the coronavirus on the construction sector one year into the pandemic. Guests included two contractors who spoke about how their businesses have been affected over the past 12 months.
Curt Hellen, president of Stava Building Corp., a full-service commercial construction firm in Tulsa, OK, said the impact of Covid was swift and stark as work came to a halt last spring.
“Projects that were already awarded and on contract were shelved,” he said. “They included multi-family residential, retail and any type of event-style space. We have a project that’s going to be a landmark for our local schools but it has been pushed all the way to at least the fourth quarter of this year.”
On the bright side, Hellen said the design side of construction has made strides to serve emerging needs.
“We have seen a nice impact on design in terms of how to better circulate exhaust and things like that,” he said, referring to the effort to improve the health and safety of newly constructed buildings. “As far as our designers and architects in this area, they’ve adapted very well, so much so that we’re seeing some existing facilities ask for some help with retrofit work.”
For Pennsylvania highway contractor Plum Contracting Inc., things have been more dire.
“Pennsylvania was the only state to shut down construction and deem it nonessential at the start of the pandemic,” recalled
Ali Mills, executive vice president of Plum Contracting Inc. in Pittsburgh. “On March 1, 2020 we started back full force on all of our projects after our typical winter shutdown, bringing 150 tradesmen back to work with high hopes for the year. And then the pandemic hit and everything changed. We had to lay off 127 people, including management. Those were scary days.”
Mills continued, “We always say, in highway construction we were social distancing before it was cool, because we’re outside, doing our work. So we fought for weeks trying to tell our legislature and our governor that we could work safely. But when we got back to work on May 1, we had to follow a 51-page safety plan and it was a new world for all of us. It took time and it took lots of money.”
Taking safety to new levels
In construction, the approach to Covid-related safety is inherently different from many other industries that can fairly easily send people home to work remotely.
“Construction is probably the antithesis of social distance,” Hellen said. “You can’t build projects remotely. You have to go to the project site and you have to do work with your coworkers in order to produce a final product. We’ve seen a lot of proactivity with things like contact tracing and temperature checks, however. There have been some very forward-thinking measures taken in those areas.”
He added, “Our local subcontractor community really stepped up to the plate and AGC of Oklahoma has been very instrumental in homogenizing the forms we need to fill out and modernizing processes so we have one system that everybody follows relatively closely, as opposed to a very fragmented approach.”
Broken supply chain
Hellen noted the supply chain has been severely disrupted by the pandemic. “It was really pronounced in some aspects,” he said. “I don’t know if that has to do with the geographic area or the materials being manufactured, but it really has been severe in some of the materials that we’re trying to procure, even to this day. In some cases, they’ve been backlogged for months.”
Mills said her firm has faced challenges with materials as well. “A lot of our materials use the same resin that is used in PPE products, so we’re seeing prices skyrocket, almost on a weekly basis,” she said. “We’re finding that things we never had trouble finding before now have huge lead times, and that’s going to be detrimental to our business.”
Among the findings AGC reported in its survey analysis, prices for materials and services used in construction and contractors’ bid prices both declined at the beginning of the pandemic but have diverged sharply since last April, said Kevin Simonson, chief economist for AGC.
A government index that measures the selling price for materials and services used in new nonresidential construction jumped 1.9% from January to February and 12.8% since April 2020. Meanwhile, the producer price index for new nonresidential construction - a measure of what contractors say they would charge to erect five types of nonresidential buildings - increased only 0.3% last month and 0.5% in the 10 months since April.
The future looks questionable
Plum Contracting faces not only the universal task of recovery from the economic effects of the pandemic, it also continues to deal with the age-old struggle of reliance on state funding. “As 2020 went on, we thought 2021 would get better, but in Pennsylvania, we also have the problem with a lack of highway funding,” Mills stated.
“We fight every single day to try to educate our legislators and find funding to go back to work,” she said. “We just recently got back to bidding work in March, and we do not anticipate 2021 being any better than last year.
“Still, we are hopeful for a highway surface transportation bill to come through to help aid us in getting our people back to work. We’re in dire need of something here. We employ so many people and to have them sitting at home is devastating.”