COVID-19 IMPACT SURVEY MAY 2020
Like many other industries, the construction industry is also feeling the heat of the pandemic, its rapid spread across the globe and containment measures adopted by governments. Despite regional variations in legal implications and nature of contractual terms of agreement, the overall impact on construction projects has been massive thus far. The COVID-19 pandemic has made completion of construction projects impossible and a large percentage of projects have been put on hold. Shelter-in-place orders, social distancing norms and restriction son logistics and transportation have disrupted labor markets and supply chains. Several countries like Italy, China, Iran, and India have shut down most industrial production operations thereby creating a sharp temporary decline in production of a wide range of construction materials ranging from steel to cement. The disruptions, shortages and rising material and labor prices are making project completion not only expensive but also slower, leading to more projects being cancelled. The repercussions are being felt across the construction value chain i. e. from construction equipment rental companies facing abrupt vaporization of revenues as equipment are left idling on inoperative sites to manufacturers of roofing, flooring and others recording declines in new sales orders. In Europe, where the pandemic has been especially aggressive, over 65% of companies in the construction ecosystem have been severely affected by the prolonged construction inactivity. As normal business activity remains suspended and delays continue indefinitely, companies are beginning to bleed.
The virus led recession is expected to create double whammy challenges for the sector as unemployment rates climb to never before seen highs. In the United States alone, the unemployment rate stands at 14.8% as of April 2020, a percentage figure that translates to over 40 million unemployed people. The impact on consumer confidence and discretionary income brings grim news for the residential home construction sector as intent and ability to purchase new homes will be hit hard. Single-family home affordability issues and resurgence of X-urban or rural living as a result of reverse migration of labor will interrupt an above-average pre-corona virus cyclical transition in the construction industry. Residential remodeling especially less critical luxury updates have significantly slowed down. Along with residential, even non-residential construction projects will decline as the recession takes hold on businesses. Against this backdrop, the global market for roofing is expected decline by -13.1% in the year 2020 before reaching a projected revised market size of US$101.9billion by the year 2027. Leading segments for growth in the post COVID-19 period that will offer hope for roofing manufacturers will include low-rise multifamily construction in suburban and rural areas; warehouse and distribution facilities; and repurposing, remodeling and conversion of existing healthcare facilities for future health emergency preparedness.
Other factors which will remerge to drive long-term gains in a changed post corona virus construction landscape will include recovering focus on energy efficient buildings; evolving roofing research, standards development and the resulting effervescent technology innovations; provision of government policy led incentives such as subsidies for the adoption of energy efficient roofing materials; potential demand for reflective metal roofing solutions as against traditional energy and heat absorbing dark asphalt roofs; growing commercial value of eco-friendly roofing solutions such as roofs manufactured from recycled-metals, recycled-plastic shingles, and reclaimed wood roofs. With buildings accounting for over 45% of global energy consumption, R&D focus will shift towards roof tiles integrated with solar cells and insulated roofing innovations. The escalating levels of air pollution will also bring smog absorbing titanium dioxide roofs into the spotlight as the most commercially lucrative innovation to battle air pollution, while ease of installation and excellent acoustic insulation will drive demand for ethylene propylene diene terpolymer (epdm) rubber roofing membrane.