Continuing Labor and Supply Shortages

Labor and supply shortages will continue to wreak havoc in 2022, with many contractors predicting these deficits will cause additional project delays or force them to ask more of the workers they currently have. Analysts are predicting that inflated material costs will remain until at least the middle of 2022.

The lack of skilled workers also shows no sign of going away with the COVID-19 pandemic exacerbating an already steady decline in construction workers that has been going on since the 2008 recession.⁸ One reason for this decline is the generational divide in the demographics of construction workers. Many former construction workers are older and found that it made more sense for them to retire from the industry completely once the pandemic hit, and younger generations who are in or are entering the workforce do not see construction work as an appealing path.

While these issues will persist throughout 2022, there are several ways for contractors to lessen the impact of these setbacks. Contractors can change the way their contract agreements are structured, so they will not get saddled with excess debt if they cannot complete a project in a set amount of time. To preempt any supply shortages they might run into during their project, contractors can stockpile essential materials and order materials immediately after contracts have been signed, regardless of when the project is due to start.

A Greater Emphasis on Going Green

The construction industry currently accounts for 39% of universal carbon emissions, and construction executives state that creating more sustainable construction practices is a top priority for them.⁹

While many companies acknowledge that using mostly sustainable construction practices is better for the environment, they also know that adopting more environmentally friendly practices will be good for their bottom line. By reducing their carbon footprint, companies can reduce their overall construction costs.

The push for more sustainable construction practices can also be seen in fleet leasing, with Ford pushing to make their new F-150 Lightning electric trucks more accessible to consumers.¹⁰

Digital Transformation

2022 is projected to see more widespread use of technology which will help the construction industry usher in a new era where artificial intelligence becomes more predominant in helping contractors complete jobs.

An example of new technology becoming more prevalent is the use of drones on job sites. Drones can provide contractors who might have to be offsite with the data they need to make decisions quicker.¹¹

3D printing is also projected to make an impact in 2022. As contractors are unable to import certain parts and equipment, some may turn to this method in order to get the materials needed to complete a project. While the shortage of construction workers continues, contractors may find that digital technology may help them with completing some essential tasks at their building sites.

Certain jobs can now also be done by using new technological advancements, like having a mechanical arm lay bricks. These technologies, however, are only meant to provide assistance when there are no workers available.¹²

The Importance of Partnerships Will Continue To Be Underscored in 2022

As we move into a new year and industries across all sectors make a comeback, it’s important to have the right partner — whether from a small business lending perspective or for fleet leasing needs — by your side.

The Bancorp can provide construction businesses with assistance on how to get the most out of an SBA loan. Our Commercial Lending Team is available throughout the loan process to answer any questions that may arise. In addition, the team will help vet project budgeting from the proposal stage through to groundbreaking and opening day. By having a trusted financial partner like The Bancorp, businesses are better equipped to navigate the price-escalation clauses that are becoming prominent in construction contracts.

From a fleet leasing perspective, The Bancorp is one of only a few bank-owned commercial fleet leasing groups in the nation which provides simplified end-to-end solutions. For companies that are longstanding partners with The Bancorp, having access to historical data — including profit and loss statements, which for many in 2020 were not necessarily a positive representation of their business — allows the team to find creative solutions when owners look to renew their lease agreements. The team can find vehicles and tailor the lease terms to increase cash flow. By partnering with The Bancorp, they will also be able to find company vehicles that other institutions may not have access to, due to its large dealer partnerships across the country. Additionally, by working hand-in-hand with the Commercial Fleet Leasing Team, business owners will have a trusted resource for how to cycle fleets appropriately or be prepared for potential future vehicle delays and shortages.