How the AEC industry can keep up after natural disasters
With about a month remaining in the 2018 hurricane season, the United States has already seen 15 named storms and seven hurricanes. Hurricanes Michael and Florence alone combined to cause over $70 billion in damage by some preliminary estimates.
At first glance, it might seem that natural disasters would bring financial benefit for industries that rebuild in the wake of a catastrophe, and in many cases, they do. But the relationship these extreme weather events have with the architecture, engineering and construction (AEC) industry can be complex.
Like nearly all hurricanes, most of the damage from Michael and Florence this year came in the form of residential homes. Rebuilding these houses offers a sure stream of revenue for the AEC industry, but the speed and funding of these projects is often determined by the degree to which victims are insured against the natural disaster at question and the extent of federal relief funds. Hurricane Harvey, for instance, caused $25-37 billion in flood damages, but only $6.5-9.5 billion of those costs were covered by insurers.
Cleaning up before construction
In terms of constructions starts, data from Dodge Data & Analytics indicates that numbers typically fall in the immediate aftermath of a natural disaster, but then steadily climb in the months that follow. This trend, they say, reflects the fact that before construction can begin anew, fallout from the storm must be cleaned up and the damage assessed, creating a lag time that can last several months. This was the case for many of the areas affected by the Thomas Fire and subsequent mudslides that decimated multiple communities in Southern California last December. Ryan Milhon, president of Montecito Construction Inc., says that overall the disasters were a boon for business, but much of the work is only now starting to come in, nearly a year later. “There’s been a lot of flood control and flood mapping that needed to take place, so they’re just now getting a lot of permits and planning underway,” he said.
Labor shortage and rebuilding efforts
Like so many facets of the AEC industry, the response to natural disasters is further complicated by the shortage of laborers. For contractors who are scrambling to find workers, a natural disaster can add to the strain of an already depleted workforce. Ryan Stone, the crew matchmaker lead at Florida Construction Connection, said that in the wake of Hurricane Harvey, clients were calling him looking for any available superintendents who could oversee the clean-up effort. Likewise, Milhon says he’s noticed the market become even more competitive in the wake of the fires. “People are advertising in laundromats—any avenue they can,” he said. “Poaching is probably the best method for getting crews—spending more money for quality people.” While this competition can equate to higher wages for tradesmen, the overall lack of laborers may keep rebuilding projects moving slower than expected, which is likely the last thing victims of these natural disasters want to hear.
Recruitment, tech and retainment
With the market showing no signs of becoming less competitive anytime soon, contractors will be forced to adopt new strategies to stay agile and meet the demands posed by more frequent natural disasters. Whether that comes in the form of new recruitment tools, new tech or simply convincing existing workers to travel to more distant jobsites, it seems highly probable that the industry will have plenty of houses to clean up and rebuild for the foreseeable future.