After some time of speculation, the Coronavirus (COVID-19) has reached the United States and health experts are working tirelessly on containment methods and vaccines. Meanwhile, the U.S. economy is responding as we assess how to best handle this unexpected contagion. Many industries are taking cautionary measures to help reduce or halt the spread. Below are some of the ways the construction sector could be impacted as a result of this pandemic.
Supply Chain Disruptions
Signs were not good for the U.S. construction industry even when the virus was 7,233 miles away in China. A major link in the supply chain was in jeopardy.
Imports from China account for nearly 30% of all American building product imports. This makes China the largest single supplier to the U.S. over the last 20 years. Such a significant reliance on Chinese-made construction materials – from electrical and lighting equipment to plumbing fittings and HVAC – could mean higher material costs. It could also slow project completions. Wuhan, for example, is the epicenter of the global virus epidemic. It also produces metal products, mechanical equipment, and solar panels as well as electrical and electronics manufacturing. Over 164 manufacturing facilities in Wuhan supply products to the global construction industry. Of these plants, 13 directly manufacture construction materials.
As things stand today, production lines in China are largely at a standstill. Many employees are either quarantined or instructed to stay away from work. Shipping containers loaded with supplies are lying docked in Chinese ports. Finished products are idle in Chinese factories for lack of transportation.
“Due to the Coronavirus outbreak, cargo volumes at U.S. ports might be down by 20% or more on a year-to-year basis compared to 2019,” said Cary Davis, an official with the American Association of Port Authorities.
Construction companies are scrambling to source supplies locally on short notice, which will invariably hike costs. And the question still remains as to who will bear responsibility for projected delays, as per written agreements and possible invocation of the force majeure clause (a common clause in contracts that essentially frees both parties from liability or obligation in the event of an unavoidable situation that is beyond their control).
Another complication that could arise in the near future is shortage of masks. The World Health Organization (WHO) has warned of a global “chronic shortage” of such crucial PPE (personal protective equipment) for construction jobs that require breathing protection. Even though small-particle-blocking N-95 masks don’t prevent the spread of Coronavirus, the general population is buying them up. This leaves construction workers unnecessarily exposed to job-related health hazards.
The future is still uncertain. It is hard to tell how hard the construction industry will be impacted yet, as the virus is still spreading.
Watch this space for more information as situations develop in United States – and the world.