coronavirus may have construction industry consequences

Less worried at this very early stage about the impact of the Coronavirus on workers, construction industry leaders say the spread of what is officially called COVID-19 could lead to a price increase in materials coming from China.

Because nearly a third of all building product imports, including machines and parts, come from China, a slow-down in material production in that country may hit the bottom line of many construction projects in the U.S.

According to sources, cargo volumes, due to the outbreak of the virus, may now be down by as much as 20 percent at U.S. ports.

Richard Branch, a chief economist for Dodge Data & Analytics, has told the publication Construction Dive that the situation could be particularly precarious for commercial builders that “rely on Chinese-made materials,” noting that the slow-down could mean “higher material costs and potentially slower project completions.”

In a statement, Ken Simonson, chief economist with the Associated General Contractors of America, noted that while “overall economic conditions remain favorable, future construction spending levels may be affected by the growing uncertainties related to the Coronavirus and its impact on the supply chain for construction components, especially those manufactured in hard-hit countries.”

Simonson added that despite such concerns, no U.S. contractors have as of yet reported supply problems that could impact their projects.

Meanwhile, the National Law Review is advising contractors to consider seeking compensation for the increased costs of some materials in their project contracts.
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“Whether you are negotiating a contract for a new project or in the middle of construction, it would be wise to consider who will bear the risks and costs associated with the still evolving Coronavirus,” the publication says.

​By Garry Boulard

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