Congress passed a $1.2 trillion bipartisan infrastructure bill last week, which will boost building projects across the country. But several outside forces are currently creating challenges for the sector.
"Construction is very much a story of two industries right now," said Ken Simonson, chief economist for the Associated General Contractors Association of America. AGC represents 27,000 building firms across the country.
"We had a tremendous boom in residential construction work — new homes, additions and renovations to existing housing. And then on the non-residential side, (we had a) tremendous decline in new office or retail construction and limited growth in some other categories," Simonson said.
The construction industry has been hit with price increases and supply chain issues during the pandemic. For example, the price of steel has more than doubled in the past year and the price of lumber has fluctuated.
Simonson said the problem is compounded by the fact Hawaiʻi is an island chain.
"Well, certainly Hawaiʻi has a different situation when it comes to acquiring the materials needed for construction — and I hope that you're not being plagued with the same issues of port congestion that other places are," Simonson said. "On the other hand, just getting a ship to call on Hawaii, that may be a problem. And you do share the problems of contractors everywhere of getting materials produced and delivered on a schedule."
Labor has been an issue across the continental U.S., but Hawaiʻi has remained steady. There were more than 37,000 construction workers employed in September — about the same as in February 2020.
"In Hawaiʻi, construction employment is already above where it was before the pandemic hit, but there's a big question as to how much additional demand there will be and where the workers will come from to satisfy that," Simonson said.
Another concern for the industry is President Biden’s vaccine mandate for businesses with more than 100 employees.
"Contractors are not in a position to enforce vaccine mandates among the many subcontractor or delivery truck drivers and others who come onto a job site, or government inspectors," Simonson said. "So to put this burden on contractors is really worrisome. And then to divide the industry and say there's one set of rules for firms that have 100 or more employees and the rules don't apply to smaller firms, that's also likely to create disruption — even havoc."
Construction cycles come and go, with boom times and bad years. Simonson said the current situation is a mixed bag.
"I would say it's getting to be a better time for nonresidential construction opportunities," Simonson said. "But the challenges are immense — unprecedented price increases, supply chain bottlenecks, and now difficulties of complying with new requirements on vaccination, on top of an already difficult labor market. So it's going to be a challenging but exciting time going forward."
