The Associated General Contractors of America issued an inflation alert last week, responding to the construction industry’s “unprecedented mix of steeply rising materials prices, snarled supply chains, and staffing difficulties, combined with slumping demand that is keeping many contractors from passing on their added costs.” According to AGC officials, “this combination threatens to push some firms out of business and add to the industry’s nearly double-digit unemployment rate.”
Construction employment in February remained below pre-pandemic levels in all but six states, according to an analysis by the AGC, while soaring materials costs and supply-chain problems threaten future employment. “Today’s figures show most states are still far from recovering the construction jobs lost a year ago,” said Ken Simonson, the association’s chief economist, in an AGC release. “The overall economy is recovering, but huge price spikes and ever-lengthening delivery times threaten to set construction back further.”
Association officials called on the Biden administration to roll back tariffs on a range of key construction materials, including lumber and steel, that are contributing to the price spikes. They also urged the administration and Congress to work together to find ways to ease shipping delays that are undermining established supply chains. This could include providing temporary hours-of-service relief and looking at ways to expand port capacity, according to the release.
“The coronavirus has wreaked havoc on many supply chains, but some of the price increases are the result of misguided policy decisions, including tariffs,” said Stephen E. Sandherr, the association’s chief executive officer. “Cutting tariffs and addressing shipping delays will give a needed boost to many firms struggling to get back to pre-pandemic business and employment levels.”