Did Someone Shout Fire?

Back to Library

The Hiring Zone
Issue #12250 - May 2020 | Page #88
By Thomas McAnally

If you watch the 24/7 news cycle, then you may think that the world as we know it is coming to an end. Yes, COVID-19 is affecting everyone, everywhere, but to different extents. If you are in a non-essential business, you’re hurting. Some component manufacturers in locked down states are in a desperate struggle to survive, while most CMs and homebuilding in the US are considered essential and are much less affected.

Depending on geographic location, you may not have experienced a major impact from COVID-19 (yet). One of my multiplant clients said that, if the 24/7 news cycle wasn’t all about COVID-19, he wouldn’t know anything was wrong. No decline in orders, no cancellations, no reschedules, and no labor issues other than what is experienced in normal operations. In fact, I have asked every client that I talk to if they have any employees who have come down with COVID-19 and all, representing over 2,000+ employees, said no or not that they knew. Several said they had projects on temporary hold because someone on-site tested positive, but that would only delay delivery by a few days.

When it comes to business problems caused by COVID-19, one of the biggest is uncertainty. Most of the country has been on lockdown, although that is beginning to ease. Most States have had exceptions for construction and manufacturing, but that has not been universal. Uncertainty also will come from the ever-changing State restrictions that are meant to protect metropolitan areas, and it’s too soon to know how they will evolve. The uncertainty of not knowing how COVID-19 will affect CMs’ ability to operate in 2-4 weeks, when most operate on a 4-6-week backlog, has some CMs stymied.

Seeing a drastic drop in housing starts since January is like someone Shouting Fire in a crowded theatre. With only a few years passed since the Great Recession, some CMs flash back and wonder how they would have handled that one differently. Everyone is looking for signs that we are on the precipice of another similar event.

Uncertainty is also affecting lumbermills. Inventory is high, mills are curtailing production and closing some locations, and prices are dropping $50-$60/M. (See Lumber Briefs by Matt Layman on page 102). As a result, capacity will restrict a surge, but not for long. Mills can respond quickly to increase output, but the resulting rebound in prices creates uncertainty for CMs bidding jobs 60+ days out.

The significant decline in housing starts reported last month may not be the boogeyman that it appears to be. Year over year, we are still up 5%. Demand for housing is still high with inventory low, and the only obstacle in the way of meeting that need is COVID-19. Once the virus has run its course, people gain immunity (we hope), scientists will develop a vaccine and better treatment options, and demand will return. Will it be this year, next year, or will we be dealing with COVID-19 for years? Nobody thought the Great Recession was the Great Recession until it was over. What will we call this boogeyman, The Great Infection?

My take? Plan for the uncertainty that COVID-19 brings, be flexible, be compassionate, and know that this too shall pass.

You're reading an article from the May 2020 issue.

Search By Keyword

Book icon Issuu Bookshelf