COVID and Business HERO

Effect of COVID-19 on Business

COVID-19 has changed the way we all do busi­ness, from man­u­fac­tur­ers to con­trac­tors. In a year where we’ve all had to adapt, both to huge swings in demand and in terms of how our ser­vices are pro­vid­ed, con­trac­tors espe­cial­ly are adjust­ing to the new real­i­ties.

Dur­ing August and Sep­tem­ber, HIRI sur­veyed 550 con­trac­tors to get their take on how COVID has impact­ed their busi­ness. These con­trac­tors pri­mar­i­ly served the res­i­den­tial mar­ket and included:

  • Remod­el­ers
  • Exte­ri­or contractors
  • Mechan­i­cal contractors
  • Fin­ish contractors
  • Land­scape contractors

The Impact of COVID on Contracting

It’s been a steep learn­ing curve for every­one this year, and con­trac­tors are keep­ing an eye on the news as much as their clients. Near­ly 90% of con­trac­tors who replied to our sur­vey said they were, at the very least, con­cerned about COVID, with 46% of them say­ing they were very concerned.

While we hear anec­do­tal sto­ries about demand being up since home­own­ers are home and itch­ing to final­ly fin­ish the base­ment or have a new roof installed, on their face, the num­bers don’t seem to sup­port this trend. Look­ing a lit­tle deep­er we see a slight­ly dif­fer­ent sto­ry.

Among our respon­dents, 80% said that the num­ber of projects under­tak­en was sim­i­lar or down, com­pared to the pre­vi­ous year, with 60% not­ing a some­what or sig­nif­i­cant drop. Sim­i­lar­ly, the val­ue of jobs has stayed the same or gone down, with only 20% of respon­dents report­ing increas­es since 2019, while 44% report­ed decreas­es. This is very like­ly true as many Pro busi­ness­es were shut down for a time in the spring, and ulti­mate­ly they com­plet­ed few­er projects this year. Since reopen­ing, many busi­ness­es have seen tremen­dous activity.

Staying Safe While on the Job

HIRI Staying Safe on the Job

In an indus­try with lit­tle to no oppor­tu­ni­ty to work from home, con­trac­tors have had to find ways to stay safe while still deliv­er­ing their ser­vices. The use of vir­tu­al con­sul­ta­tions has gone up, with 44% of our sur­vey respon­dents say­ing they’re using these online con­ver­sa­tions as a way to safe­ly meet with new clients.

While on the job, 79% of con­trac­tors report wear­ing masks, while oth­er pre­cau­tions like increased clean­ing and san­i­ti­za­tion and work­ing in small­er crews have also been adopt­ed. More than half of con­trac­tors expect these pre­cau­tions to con­tin­ue for at least a year.

Still, most (65%) of the con­trac­tors we heard from said they were still com­fort­able enter­ing a client’s home, in part because of this addi­tion­al focus on safe­ty. The vast major­i­ty (82%) of respon­dents said at least a few of the clients asked about health and safe­ty protocols.

Keeping People Working

The ear­li­est part of the pan­dem­ic was stress­ful for both busi­ness­es and fam­i­lies. With shut­downs across the coun­try and plung­ing eco­nom­ic indi­ca­tors, many indi­vid­u­als faced unem­ploy­ment in the spring.

For­tu­nate­ly, con­trac­tors have been rel­a­tive­ly well insu­lat­ed, with only 30% of respon­dents report­ing that they had to fur­lough work­ers as a result of COVID. The bet­ter news is that 82% of those con­trac­tors were able to bring at least some of those work­ers back as the year progressed.

Staying on Track

HIRI Lumber

It was a tough year for res­i­den­tial con­trac­tors to keep their projects on track, even when regions were open for busi­ness as usu­al. Sup­ply chain issues, like a lum­ber short­age over the sum­mer, caused delays on a num­ber of projects, with over half of respon­dents say­ing they expe­ri­enced hold-ups get­ting their busi­ness mate­ri­als.
Prices also appear to have gone up for many build­ing mate­ri­als: More than 50% of respon­dents said they were pay­ing more for mate­ri­als this year.

Many con­trac­tors have also had to adjust how they buy their mate­ri­als. About 30% of respon­dents are pur­chas­ing more of their build­ing mate­ri­als online, and half of online pur­chas­es are sent direct­ly to the job site. Change doesn’t always need to com­pli­cate process­es, and a com­bi­na­tion of online pur­chas­ing and direct ship­ping is gen­er­al­ly viewed positively.

What’s Next?

Unfor­tu­nate­ly, there isn’t much hope for things to improve in the near term. Less than half of the respons­es received indi­cat­ed that they expect­ed things to get bet­ter in 2021. The great­est poten­tial appears to be in main­te­nance and repair projects, with home­own­ers look­ing to keep their prop­er­ties in good repair, rather than mak­ing large-scale changes.

More infor­ma­tion on how COVID has impact­ed the res­i­den­tial con­struc­tion and remod­el­ing indus­try is avail­able to HIRI mem­bers in our report: COVID-19 Con­cerns and Impacts on the Con­struc­tion Indus­try, Fall 2020.

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