Harsh lessons from Asia: planning for US recovery

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John Robbins

Managing Director, USA and North America Head of Real Estate

North America

On March 27, New York Governor Cuomo announced, “We’re closing down non-essential construction sites. Some construction is essential to keep the place running, but non-essential construction is going to stop.”

For several weeks, the construction industry had been facing the reality of the situation and looking for guidance from the government and health officials on whether construction was essential. Governments were caught in the unenviable position of having to balance upholding public health, while also protecting the local economies from recession and staggering unemployment among workforce sectors where remote working isn’t possible.

This uncertainty sent mixed signals within the construction industry on its response to the coronavirus (COVID-19) pandemic. News outlets showed pictures of construction sites open and even videos of workers complaining about being deemed “essential” while concerned for their own safety.

The reality is that governments and public health officials created this uncertainty and their lack of clarity may have unnecessarily put the supply chain, developers, contractors, project managers and trade workers in a complicated and possibly even dangerous position.

In New York, the Governor has decided that it is in the overall best interest of the state to declare some forms of construction as non-essential. It’s likely that, as the number of people affected by the pandemic grows in other major cities, other leaders will follow suit.

The question on everyone’s mind now shifts to when a re-start will happen and what that will entail.  

Learning our lessons

As we look ahead to the recovery from this unprecedented scenario, we need to learn from and evaluate all available information, including lessons from Asia. We need to set a new direction for construction – showing a sector which provides opportunities to innovate, develops careers and which cares for its own. In this, we need support.

For example, the U.S. can learn lessons from Hong Kong, which is committing to major public spending in order to kick start its economic recovery – providing reassurances to industry of a strong pipeline of work that will give certainty to individual jobs, company balance sheets and wider growth. 

Similarly, law makers and policy think-tanks need to be seriously discussing various initiatives, including a national infrastructure plan. This isn’t an entirely unfamiliar strategy for America. The Hoover Dam was one great example. Launched during the Great Depression, this government-funded engineering marvel put thousands of workers back to work and provided a much-needed economic injection to the nation.  

Plotting a better way forward

Governments, at all levels, will have an important role to play once we come out the other side of this pandemic. The construction industry, in turn, needs to demonstrate that it is up to the challenge – using the recovery to drive technological innovation and integration, supply chain improvement, achieve higher productivity, improve approaches to site health and safety, and showcase our talent.

We should see this as a way to attract new people to an industry that for years has struggled to find skilled and unskilled labour and is well-behind the productivity curve compared to most other industries.

This can be our chance to attract fresh ideas and diversity of thought. And, well beyond the trade labour, the industry has a wide array of white-collar jobs in tech, design, and project management which are also starved of talent.

Creating a more resilient supply chain

Supply chains are in disarray. From the manufacturing centre of Wuhan to the stone quarries of Italy, materials are – at worst – at a complete standstill and – at best – delayed getting to job sites. This is slowly restarting as China loosens restrictions and ramps up production. But, restoring the complex network of goods and materials will take time.

It will be critical for the industry to thoughtfully examine how we’ve supplied in the past and learn from the old adage, “don’t keep all your eggs in one basket.” We have an opportunity to create better equilibrium across the law of supply and demand.

If developers and planners are serious about having secure supply chains, then one of the most obvious steps is to ensure we have a geographically diverse range of suppliers and rethink the the mix of just-in-time deliveries versus having ready access to warehoused materials. In certain scenarios, having material on-hand will provide assurances as construction eventually ramps back up.

Live for today and plan for tomorrow

Right now, with many projects cancelled, postponed or pushed to 2021, clients need help analysing their portfolio and projects. Many in the industry are focused just on keeping the wheels on the wagon. Even so, as an industry we need to be prepared to come out strong when construction can restart.

The time is right to help clients with analysing their portfolio and projects, as hard decisions need to be made, by assessing risk, learning from what others are doing, and watching for and quickly actioning opportunities to improve our industry’s performance. 

Further resources

Please visit our COVID-19 response page for all of our resources relating to the impact of COVID-19 on the construction sector.

For further information contact:

John Robbins.jpg

John Robbins
Managing Director, USA and North America Head of Real Estate

t: +1 (212) 370 7321