A theme of uncertainty prevailed throughout NJBIZ’s May 23 Construction and Development virtual panel discussion, as the industry navigates stressors lingering from the pandemic and compounded by supply chain issues and economic pressures.
Moderated by Editor Jeffrey Kanige, the conversation was not without silver linings, as panelists Samantha DeAlmeida Roman, president, Associated Builders and Contractors of New Jersey; Damian Santomauro, co-leader, Construction Law & Litigation Team, Gibbons PC; and James Thaon, principal, Bohler, offered insights for navigating new realities and optimism for harnessing new opportunities.
“I think it’s a new normal,” DeAlmeida Roman said. “I don’t think that we will ever be back to the normal pre-COVID – at least not one that I can see. But generally, my members are doing very well. They’re busy. They are taking advantage of the incentives and the projects that are coming down the pike in the state of New Jersey.”
That membership represents the largest ABC chapter nationwide, DeAlmeida Roman said, with 1,300 open-shop member companies.
“Obviously we are keeping an eye on the economy and inflation and all of the supply chain issues and other types of issues that continue to pop up like whack-a-mole. But, nonetheless, I feel like we’re in a new normal, at least for right now,” she added.
Supply chain, in particular, is an issue that still plagues the construction and development space, the panelists agreed, even if it doesn’t garner the attention it has over the past couple of years.
While there has been a “softening,” certain products – with limited markets or specialty items – could still be subject to months-long delays. According to Thaon, his team at engineering firm Bohler is hearing from the construction world that transformers, for example, need to be ordered with 14 months lead time.
After functioning amid sustained uncertainty for so long, many in the industry are using their hard-learned lessons to operate more efficiently and to try to mitigate or account for disruptions where they can.
Though uncertainty in supply chain still exists, according to Thaon, “It’s definitely better. And we think that because this has been a problem that existed now for a couple of years, contractors and developers are getting pretty savvy on asking those questions, upfront understanding where to take risks.”
“Maybe you do order that material ahead of time,” he said. “So it sits in a warehouse until you need it, so that it’s ready and there when you need it.”
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At law firm Gibbons, Santomauro said supply chain issues are getting worked out contractually – before they have a chance to escalate into larger problems and before a project starts.
“Almost like in anticipation: We all know we’re going to end up with an issue here. How are we going to allocate that?” he explained. “And sometimes you’re allocating it, like James said, by taking steps to order early, and someone bearing the risk if you don’t need it. But then, other ways you’re dealing with what happens during the project where we have to order it.”
He agreed that there has been some softening on supply chain constraints, but like his fellow speakers, pointed to the severity of disruptions really coming down to a project-to-project basis.
“It’s not completely solved. … I don’t think it’s as widespread a problem as it was … But I still think it’s an issue that plagues projects and particularly, again, if it’s a specialty thing that’s needed and there’s a limited market,” Santomauro added.
As for whether or not onshoring efforts have helped to turn the tide of supply chain snags, uncertainty again prevails.
“Certainly having things within the United States, and not having to internationally ship materials has made a big difference,” DeAlmeida Roman said. However, the infrastructure surrounding those efforts is still developing in many cases.
According to DeAlmeida Roman, it again comes down to a project-by-project perspective.
“It really does place a struggle,” she said – despite the relative alleviation around securing materials. “When you speak to the contractors that often call me frustrated and they say, ‘Well, what can we do about this?’ You know, it’s really a big deal for them at that given time, especially when you’re trying to get a project done on time and on budget.”
Panelists also explored additional contributing factors to uncertainty in the sector and how operators are working to combat them – ranging from labor shortages and developing next-generation workforces to higher interest rates, the impacts of sustainability, doing business in New Jersey, and more. Stay tuned for expanded coverage in the Construction/Development Spotlight section of the June 19 issue of NJBIZ.