Looking Ahead to 2017

By Rob Burton, President and CEO

As 2016 ends, I’ve been reflecting on how the United States is part of a world economy – one piece in a much larger puzzle – and that as we move into 2017, we will face many new challenges. Some of these challenges will be shifts in the global and national scene, but others will be industry-specific, such as dealing with inefficiencies and waste.

The new Trump administration is calling for several things that could greatly affect us as an industry. If we build a wall and deport millions of people out of the country, I am confident we will have significant labor shortages, more than what we’re facing right now. If this happened in a short period of time, it could be a shock to our inflation projections. Further, we hear about a multibillion dollar infrastructure program. While I doubt this will happen quickly, it still may get approval. If so, we will face additional labor pressures as well as a big demand for concrete, gravel, steel, equipment, and more. Again, inflation could be lurking around the corner.

Tax cuts and repatriation of overseas funds could make U.S. corporations more likely to invest in capital projects. This too could add pressure on our industry. So, while some of these ideas are positive for job growth and construction, my message is that we need to proceed with caution.

The way to be careful is listening more to our supply chain, asking more questions and being more detailed in our conversations. Each estimate we do is a projection of the future. This is the first step, and we can be more specific and qualify our inflation projections. This has been done many times before. During the oil crisis of the 1970s, it was impossible to project the future price of asphalt for example.  In the early 80s all asphalt quotes had inflation qualifiers in them.  Another strategy is to get subcontracts signed and executed in a timely fashion. Waiting to buy something later could cause big problems.

Which leads us back to some of the shifts we will see in our own industry. Taking these steps and being cautious fit well in our SmartBuild strategy – improvement based on lean construction principles that drive out waste and increase value to our clients. Negotiating with strong trade partners and improving our planning will likely solve many of these challenges. Encouraging more detailed pull planning with all our partners can help us catch issues early in the process. Increasing communication with clients is critical to solving problems.

I believe our industry is on the right track. We need to continue to build smart and remember the lessons we’ve learned. There has never been a better time than now to drive change and capitalize on our potential.