What’s Next? The Building Industry After CoVid-19
This week we talk about how COVID-19 is changing the world and our industry in a variety of ways.
More About the Show
The Build Perspectives podcast shares insider knowledge to build connections and community in the building materials industry. Tim and Carolina are friends, colleagues and former coworkers who love the construction industry and their clients, and want to share their passion and insights to attract future talent to the industry.
In this episode, Tim and Carolina talk about COVID-19 and how it’s affecting the building materials industry.
Things Are Changing
Unfortunately, COVID-19 is still here and affecting everyone, including the building industry.
One of the ways it’s changing the industry is housing. This is going to change how city planners develop, how developers look at their projects, how many rooms are in a house, how big a house is, and how many people live in it.
Even from a supply standpoint, things are changing. Products that will thrive in this market are ones where imports are constrained, such as cladding. Tim was looking through an import list of cladding manufacturers and almost two-thirds of them are imported on a ship.
This is going to long-term affect how we look at the supply chain. And it’s going to affect how jobs are shaped here. Tim thinks you’ll start to see mergers and acquisition activity pick up, along with satellite offices and small manufacturing operations by overseas companies that want to grow in the United States. Instead of being nice to have, as they are currently, they may be imperative in the future, to keep businesses running.
Companies manufacturing in the U.S. are going to have the upper hand right now and in the months to come, as projects are stopping and the materials that were originally spec’d from other countries may not be available or take too long to get.
The asset classes that are going to come through well after this pandemic are hospitality and travel-related ones, oil and gas, and anything energy-related. Asset classes that we know are going to change — and where building product manufacturers have an opportunity — are hospitality, parking structures, single-family, commercial construction, student housing, campus buildings and McMansions.
Parking
Parking is an interesting addition for a few reasons. One, demand was already on the rise, but now. Plus, there were already constraints on building above-ground parking garages from a regulatory standpoint. So the increase in mixed-use buildings, structures and developments bring in a lot of people with nowhere to part.
There’s also the issue of transit-oriented development. If you include transit in a high-density area, street-level surface parking is fine. But if you don’t have that, you’ll need to find room for more parking. So you’re going to see some development of above-ground parking garages and some creative creativity applied here from a design standpoint so that you can have nice looking structures, paid parking and people can have their distance and you’ll see just more people driving.
Tenant Improvement Contractors
Areas like student housing and actual campus are going to be hurting as well. We need convertible, adaptable, flexible spaces, where you can live, work and collaborative atmosphere.
One type of person we are going to need are tenant improvement contractors. They are very much problem solvers, and we’re going to need those skills, that creativity, the ingenuity that these contractors who largely are under the radar. They are sophisticated in their supply chain and are going to be collaborating with architects and designers and building owners to make the most of these spaces in this new marketplace, with a big focus on retrofitting.
Offices
Offices are going to need to be changed as well. After this, more and more people are going to continue working from home. So these commercial offices now need to be convertible to where people have plenty of space and amenity sections, like coffee bars. They need to be fixed to have plenty of space to accommodate what we’ve learned in this pandemic.
This is going to be a new ear of small groups, so you can’t have a giant clubhouse with one playground. You need to think micro, with several small playgroups peppered throughout, and different areas for small meetings. You’ll also need to consider how to upkeep these areas or provide the necessary items for them to clean themselves.
Even in homes, people will consider additions like phone booths to have private meetings without interruptions from the rest of the home. The home is going to be the new office.
No Job Too Small
Manufacturers are going to need to learn how to respond to this new design environment and architects and designers will need to think about how to specify for these new needs. Manufacturers are going to need to do a big sift and focus on interiors right now. Facades may take a bit of a back burner, especially those that don’t lend themselves to a retrofit application.
The jobs are going to get smaller. You’re going to need to be more responsive in terms of your lead times. Figure out how you can shrink those down as my advice to manufacturers because it’s going to come in fits and starts to supply chain is going to go through a whole reset and logistics is going to not look the same as six months.
Manufacturers are also going to have to learn to deal with small orders. While it’s traditionally been a lot of people touching (being on the phone with the client, putting in orders, etc.), we’ll have to figure out how to automate and systematize order, support, order entry and inbound sales. There’s no sale that’s too small. It’s a mindset shift that salespeople especially are going to need to do.
One day this market will be bigger again. But right now everyone needs every order. You are planting seeds right now and your goodwill is going to be remembered when jobs get bigger.
Modular Construction
Modular is going to thrive through this crisis, because you can manage the environment that you’re building it in and design takes place off-site, and team members can be spread out. It’s perfectly set up for this type of situation.
One of the questions that comes up if you Google “modular homes” is “Are modular homes safe?” – in terms of tornadoes or severe weather and in the case of pandemics. Modular construction is safer for single-family homes than site-built construction for pandemics, because your engineering, your systems, your systems like your cladding, your HVAC, your everything is built in a factory environment so the labor, in that case, is safer.
In the context of extreme high wind events like tornados, modular homes get a bad reputation because of the history of modular mobile homes. Mobile homes are not nearly as safe. Modular homes are built to code, placed on a concrete foundation, and and very stable. They aren’t bolted down with a few bolts to pier pads. They’re built bolted or welded down to an actual foundation.
In many ways, modular construction is safer than site-built construction: from a human standpoint, from a living standpoint – and from a disaster standpoint – in terms of a pandemic or natural disaster.
To push the point home, hospitals have the most stringent codes possible (you can’t have a hospital blowing away in a tornado or washing away in a tsunami) and Carolina is working on two hospitals right now that are modular.
Modular will help with the new recentralization of family and friends. People will want a modular backyard cottage to keep parents or kids closer to themselves. Or maybe it can be converted to a short-term rental or staycation mini-lodge.
Better Quality
Garages are changing too, being converted into extra living space, especially right now. While people have been converting these spaces into apartments or mini-hotel rooms, the bathrooms were still shared. So how will that change in the future, based on current events? The same applies to McMansions — how will they be changed to be more livable for the situation we are in now and for the foreseeable future?
And because people are at home more, they are going to want better finishes and fixtures. Because all of these things in the home are getting used more, they are going to wear out faster, so they’ll want better quality, or even commercial grade, products in their home.
Carolina read that there’s going to be a migration of people moving out of the cities into their second homes in less dense areas — and staying there.
The Takeaway & Opportunity
The big takeaway is we don’t know what’s going to happen. We don’t know what building manufacturers are going to need to do. We don’t know what developers and lumberyards and suppliers are going to need to do. What we know for sure is nimbler is better. We know for sure is smaller shipments and batch manufacturing are better. Good cashflow and tightening down expenses are super important right now.
Tim and Carolina do see an opportunity for newcomers to the industry. Right now there are people with homes that have no clue how to maintain them. They have advanced systems in their home and when something breaks, they don’t have how to fix it.
If you’re younger and tech-savvy, you could create a company where you do turnkey maintenance programs for homeowners or even office managers. You need to check with legal restrictions in your area to make sure you set up your business appropriately and don’t mislead people if you call yourself a contractor without the right licenses, but it’s a great place to start.
Right now there’s a huge constraint on labor for lawn maintenance, building maintenance, house cleaning, construction cleanup, agricultural and maintenance type jobs, thanks to a lack of available visas for the people who used to do these jobs.
We need to think about spaces — and jobs — in a whole new light.
Join the Conversation
We’d love to hear your thoughts on this week’s episode! Shoot us an email at buildperspectives@gmail.com.