Tag Archive for 'COVID-19'

IHS Markit Reports: Construction Labor Costs Stabilize as Projects Halted Due to COVID-19 Resume Work

Engineering and Construction costs fell in June, according to IHS Markit (NYSE: INFO) and the Procurement Executives Group (PEG). The current headline IHS Markit PEG Engineering and Construction Cost Index registered 49.0 in June, falling just short of the neutral mark 50; a neutral index reading indicates responders see no change in pricing. The materials and equipment portion of the index came in at 47.2, still indicating falling prices, while the sub-contractor portion came in at 53.2, signaling rising costs.

The materials and equipment sub-index recorded the fourth consecutive month of falling prices. Survey respondents reported falling prices for six out of the 12 components with only ready-mix prices increasing. Ocean freight (from Asia to The U.S. and Europe to The U.S.) continued the trend of flat pricing in June. Electrical equipment, alloy steel pipe and copper-based wire and cable also registered flat prices this month. Prices for the remaining six categories fell. With the exception of freight, all categories’ index figures rose relative to May, illustrating that although the majority of respondents noted falling prices, there were few more responders who registered price increases. 

After two months of falling labor costs, the sub-index for current subcontractor labor came in at 53.2 in June, indicating higher costs. Labor costs rose in the U.S. Northeast, Midwest and West; they fell in the U.S. South. Labor costs continued to fall in both Eastern and Western Canada.

“Construction activity has picked up over the past two months as lockdowns have been lifted; in April the construction industry lost nearly one million jobs, however in May, we saw nearly half of those jobs come back as restrictions were lifted and workers returned to worksites, albeit with new safety precautions to limit exposure to COVID-19,” said Emily Crowley, associate director, Pricing and Purchasing, IHS Markit. “Construction labor markets were facing shortages prior to the economic downturn which will limit any downside correction on wages, though we may see cuts to discretionary bonuses going forward as delays lead to a thinner pipeline of new projects, taking pressure off of labor demand in the industry.”

The six-month headline expectations for future construction costs rose in June with an index figure of 52.8, recovering from an all-time low last month. Both the materials/equipment and labor subcomponents recorded expectations of future price increases. The six-month materials and equipment expectations index came in at 53.5 this month, up from 39.9 last month, with responders expecting increasing prices for seven out of 12 categories. Expectations for sub-contractor labor registered 51.2 in June. While the U.S. West is expected to see higher labor costs in six months, labor costs are expected to stay flat in the other regions of the U.S. and both regions of Canada.

In the survey comments, respondents continued to note lower demand conditions due to the novel coronavirus (COVID-19).

To learn more about the IHS Markit PEG Engineering and Construction Cost Index or to obtain the latest published insight, please click here.

About IHS Markit (www.ihsmarkit.com)

IHS Markit (NYSE: INFO) is a world leader in critical information, analytics and solutions for the major industries and markets that drive economies worldwide. The company delivers next-generation information, analytics and solutions to customers in business, finance and government, improving their operational efficiency and providing deep insights that lead to well-informed, confident decisions. IHS Markit has more than 50,000 business and government customers, including 80 percent of the Fortune Global 500 and the world’s leading financial institutions. Headquartered in London, IHS Markit is committed to sustainable, profitable growth.

AEM: As COVID-19 Drags On, Equipment Manufacturers Continue to Face Significant Challenges

Executives say federal government has not done enough to support the industry

The COVID-19 pandemic continues to take a toll on an industry that represents 12 percent of the U.S. manufacturing sector, according to a new survey released today by the Association of Equipment Manufacturers (AEM). While equipment manufacturers are adjusting to the changing economic conditions, three quarters of U.S. equipment manufacturers say that the impact of the COVID-19 pandemic on the overall economy is still very negative. In addition, six out of 10 executives say that the federal government has not done enough to support the industry as it continues to face decreased demand and disrupted supply chains.

“The COVID-19 pandemic continues to negatively impact equipment manufacturers and the 2.8 million men and women of our industry,” said Dennis Slater, president of AEM. “We have seen some improvements to the operations and financial outlook for our member companies, but the industry still faces a long road back to normal. Even as our industry continues to help build, feed, and power our country, far too many of our member companies are running out of time.”

As the country navigates the ongoing COVID-19 pandemic, equipment manufacturers, suppliers, and distributors have largely remained open and continued to supply the equipment necessary to keep the country moving forward and help lead the recovery and renewal of the American economy. However, many equipment manufacturers are still struggling to keep workers on the job, with eight out of ten executives indicating that they will not be able to re-hire workers laid off earlier in the year.  

The second survey of presidents, CEOs, and owners of leading equipment manufacturers comes as more states are opening back up for business, and congressional leaders negotiate a fifth stimulus package. Slater continued, “While it is very encouraging that equipment manufacturers are adjusting to the new normal and re-opening all of their facilities, the impact of this unprecedented crisis is far from over and will be felt for a very long time. Equipment manufacturers have not received the support they need from the federal government, and it is therefore imperative that they take immediate and aggressive steps to support our industry.”

The survey was in the field from May 28 to June 15, 2020. The 102 respondents weighed in on the effects of the COVID-19 pandemic on the economy, the industry, their companies, supply chain and manufacturing operations, their financial expectations, as well as the challenges they continue to face and specific ways the federal government can keep equipment manufacturing strong and ensure the nation’s economic resilience.

The survey’s key findings include:

  • Three quarters of respondents said that the impact of the COVID-19 pandemic on the overall economy is still very negative, while just under half said that the impact on the industry is equally bad. 
  • One-third of respondents said they plan to lower their financial outlook by up to 30 percent over the next 30 days, while another one in eight respondents indicated they expect to reduce their outlook for the rest of the year by up to 30 percent.
  • Executives said that employee health and well-being, lack of new orders, and continued supply chain challenges are the three biggest issues they face as they re-open their facilities. 
  • The COVID-19 pandemic is taking its toll on the industry’s workforce. More than one-third of respondents said they have furloughed up to half of their employees, while roughly one in five of respondents indicated that they have laid off as many as 10 percent of their workforce. 
  • The road to recovery is lined with warning signs. For equipment manufacturers who have furloughed workers, nearly a third said they would not bring anyone back to work. For those who laid off workers, eight out of ten said they will not rehire them based on current market conditions and challenges.
  • More than eight out of 10 respondents said they would like to see a significant investment in infrastructure to help keep equipment manufacturers in business during the crisis and set the stage for the economic recovery.
  • Looking ahead, a clear majority of respondents said that the equipment manufacturing sector is not getting the support it needs from the federal government as it continues to navigate the various challenges caused by the COVID-19 pandemic.

The detailed findings are available in a memo prepared by AEM’s Market Intelligence Team.

AEM continues to lead the industry’s response to the COVID-19 pandemic, and is working closely with state and federal officials to help contain the spread of COVID-19, keep equipment manufacturing in America strong, and ensure the nation’s economic resilience. AEM has also called for bold action from Congress and federal agencies, including continued federal designation deeming equipment manufacturers and their employees, suppliers, and distributors as “essential” and additional support to ensure small and medium-sized equipment manufacturers have access to the cash they need to keep operations going. 

AEM is the North American-based international trade group representing off-road equipment manufacturers and suppliers, with more than 1,000 companies and more than 200 product lines in the agriculture and construction-related industry sectors worldwide. The equipment manufacturing industry in the United States supports 2.8 million jobs and contributes roughly $288 billion to the economy every year.

AEM Discusses 5 Ways Leaders Can Motivate and Inspire Remote Teams

By Judy Gaus, AEM Vice President of Human Resources and Operations

The sudden onset of remote work has impacted companies and organizations across the United States and around the world.

It happened almost overnight. The COVID-19 pandemic led business offices to close their doors and employees to find a way to conduct their work from home. We all went from congregating in meeting spaces and around cubicles to interacting “face to face” via our computer screens. For the past few months, we’ve found ourselves catching glimpses of each other’s homes, hearing dogs barks, and listening to children yell and laugh during video conferences. While we’ve never been farther apart from our colleagues, it’s nice to know it doesn’t always have to feel that way.

Now as the U.S. opens up and some offices begin to welcome back employees into their facilities, we know some members of the workforce will continue to remain remote for the time being. With that fact in mind, AEM wanted to share 5 useful and common-sense ways in which business leaders can motivate remote teams and help them keep pace with organizational demands and goals:

1. CHECK IN FREQUENTLY.

Whether it comes in the form of asking a quick question, clarifying a detail, or soliciting feedback on an idea, find a reason to reach out to your team members. Not all that long ago, it was so easy to simply swing by a colleague’s workstation and have a quick conversation. Now, with so many people working remotely, doing so requires being more intentional. And while technology certainly helps to facilitate communication while working remotely, it’s only useful if you’re willing to set aside a few minutes for video chat “face time” with one or more of your teammates.

While it can easy to feel like you may be intruding or imposing on others, you’re really not. And, by checking in more frequently, you’ll eventually become more comfortable and convey a message that regular interactions should continue to take place.

Subscribe to our AEM newsletters for more staff and expert perspectives.

2. HAVE FUN!

Making an effort to socialize and have fun with your team is critically important to establishing stronger inter-office relationships. For example, my team and I get together on video chat every other week over the lunch for about 30-45 minutes. We catch up with one another, take a break from our work, and talk about a favorite book we’ve read or a movie we’ve recently seen.

Ultimately, engaging your teammates and facilitating a bit of fun helps promotes a sense of belonging and community – something that’s incredibly important during these uncertain times.

In addition, AEM recently held an all-staff online meeting where we asked everyone to wear a crazy hat and we randomly selected individuals to share their favorite quarantine memory. This 30-minute meeting exclusively focused on fun and sharing personal stories. It was a great way to connect on a personal level without having any business on the agenda, and feedback has been very positive.

3. BE FLEXIBLE AND HUMAN.

The “traditional” workday is traditional no more, and flexibility is everything these days. As a leader, you need to know that your team members have a lot going on in their lives right now. Some may not be able to work the typical 8 a.m.-4 p.m. or 9 a.m.-5 p.m. schedule, and they need to know they can stop and address certain situations as they arise at home.

Few things will motivate your team members more than having a flexible boss who trusts them to manage their days effectively. Let them take care of their personal business, as they will likely go out of their way to re-engage later in the evening or early the next morning.

4. REINFORCE THE VALUE OF TEAM ROLES.

With how everything has unfolded over the course of the past few months, it’s no secret that priorities within organizations are constantly changing with time. Organizational pivots are stressful experiences, and they can cause quite a bit of anxiety and uncertainty among employees.

If you’re a leader, one of your top priorities right now should be maintaining communications with the members of your team. Let them know if their roles are changing, and be sure to convey how their positions fit into the organization’s “bigger picture.” They’ll appreciate the fact that they are continuing to add value, even if comes in a different form than it did in the past.

5. PROVIDE OPPORTUNITIES FOR LEADERSHIP.

There’s no better time than right now to encourage your team members to step up, expand their skill sets and take advantage of available training opportunities. Let your employees be leaders, and allow them to come forward and let you know how they want to get involved.

As an established leader, you need to be flexible. Lead with empathy and understanding, and be sure to set your employees up to be motivated and productive by ensuring they have the support, tools and resources they need to become leaders themselves and – ultimately – bring greater value to your organization.  

VOLVO CE Dealer Cowin Equipment Company Weighs in on Short-Term Outlook: ‘We’re Coming Back’

“All things considered, we’re confident we’re coming back out of it.”

The way Matt McGowan sees it, there’s really no overstating the impact the COVID-19 pandemic has on Cowin Equipment Company over the course of the past few months. No aspect of the organization went unaffected, forcing the Volvo CE dealer and Birmingham, Alabama-based company, which specializes in the distribution of heavy equipment for a variety of industries, to respond quickly and decisively.

But now, as summer gets under way and the United States continues to open up, McGowan – the company’s vice president of sales and marketing – can’t help but feel optimistic about what the future holds for equipment dealers, equipment manufacturers and the customers they serve.

“We definitely went through a slowdown period, but now we’re headed in the right direction,” he said. “It’s almost, at least activity-level-wise, back to where it once was. I’m not saying we’re quite there yet, but things have really picked up.”

For more information and resources on COVID-19, visit the COVID-19 section on the AEM website

SHORT-TERM SLOWDOWN

The consensus opinion regarding the effects of COVID-19-related lockdowns on Cowin’s operations: It could have been worse. According to McGowan, the company enjoyed a very strong January and February. Then, despite a significant drop-off in March, the company was still able to post a record-setting first quarter.

“There were pockets throughout the areas we cover that never slowed down,” he said. “No DOT (Department of Transportation) jobs were ever shut down by government mandate. So, we were really fortunate there, and that allowed us to pull out a pretty decent April.”

The most significant impact occurred when some OEMs that Cowin represents began shutting down in the wake of the pandemic’s emergence in the U.S. causing some temporary delays in parts shipments. And even when parts did arrive, company employees needed to take the necessary steps to disinfect items which took additional time.

“The last thing we wanted was technicians or customers maybe touching contaminated products,” said Stephen Searcy, Cowin’s vice president of product support. “So, we would disinfect on top of what the manufacturers were doing. It’s improved dramatically now, and people were understanding about it at the time. But it was still a big challenge for us, because our customers were still working.”

(ANYTHING BUT) BUSINESS AS USUAL

At no point has a Cowin store closed during the pandemic. With that being the case, said Searcy, there were times when it felt like the best course of action was to balance a “business as usual” approach to day-to-day operations while trying to react accordingly to what was happening across the country and around the world.

“Information was changing 24 hours a day,” he said. “I think back to our first memo, and it was dated the 28th of February. It basically said, ‘Here’s what’s going on and what we’re seeing developing. We’re not sure how this is going to affect us. But immediately we need to put these safeguards in place.’”

Whether it’s been encouraging the increased use of hand sanitizers and PPE, disinfecting shipments of parts, or rethinking how interactions occur with customers, Cowin leaders and their employees have quickly adopted measures to ensure everyone’s safety and well-being is the foremost priority. In addition, internal team communications have been sent several times per week in an effort to keep employees aware of developing news and how it impacts impact operations.

“It’s about how things affect employees personally, but also how it affects the company as a whole – and how we want everyone to do their jobs,” said Searcy. “Even now, we have reminders going out saying, ‘We want to stay on top of this.’ Because we want to maintain what we started months ago. We continue to reinforce things with our team, make them a part of what’s going on, and not leave them in the dark.”

Reinforcing new behaviors is a critically important task for Cowin leaders in these uncertain times. For example, there was initial worry on the part of some company salespeople regarding customer touchpoints. However, by promoting regular phone contact encouraging “tailgate lunches” – where takeout food is ordered and social distancing occurs – those concerns have largely been allayed for now.

“Customers have been great,” said McGowan. “They work with us, understand us, and recognize things are different than they were before.”

PROJECTING WHAT’S AHEAD

While it’s difficult to project what exactly the future holds for Cowin, its customers and its employees, guarded optimism appears to be the sentiment that rules the day for both the company’s parts business and its service business.

“From an inventory standpoint on the machine side, we were well stocked before the pandemic and orders placed before the pandemic only saw minimal delays,” said McGowan. “But during remote work, having parts in stock at the OEM level is great, however, when staffing levels were down to fulfill orders, that posed some challenges. Then, of course, machine availability for orders placed after the pandemic began could see more extended delays.”

As a result, he continued, company officials are trying to determine how quickly OEMs that had 2-6-week shutdowns can get up, running and – most importantly – back on track.

“I think it all depends on how fast they can get components from third-party vendors,” he said. “In reality though, we’re anticipating some new machine orders placed after the pandemic could be coming toward the end of the year.”

On the product support side, customers are anxious and want to work. However, some construction jobs that were anticipated just a few short months ago may be delayed indefinitely.

“People are a little bit tighter with their funds than what they were a couple of months ago, so it might take a few months, or even a year, for them to get back to the business level that they had before,” said Searcy.

“That being said, we’re seeing some signs that are positive. I just hope that continues to grow in the weeks and months to come,” he added.

To learn more about AEM’s efforts to support the equipment manufacturing industry, visit the COVID-19 section on the AEM website. If you have questions or need to get a hold of AEM staff, please e-mail our Response Team at responseteam@aem.org.

Subscribe to our AEM newslettersfor more AEM news and updates.

Federal Court’s Slap-Down of Proposed Workplace Mandate Helps Industry Protect Workers, ARTBA Says

The Occupational Safety & Health Administration (OSHA) is entitled to “considerable deference” in addressing the COVID-19 pandemic, according to a June 11 federal appeals court decision. The ruling assures that the transportation construction industry is free to use proven workplace best practices to protect its workers, according to the American Road & Transportation Builders Association (ARTBA).
 
The Court of Appeals for the District of Columbia Circuit agreed with ARTBA’s position and denied an attempt to require the federal government to impose a single, rigid emergency standard for coping with COVID-19. 
 
The ruling quickly turned away a request by the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO) to compel OSHA to force implementation of a universal safety standard.  Specifically, these organizations wanted OSHA to implement within 30 days a universal “emergency temporary standard” for infectious diseases which would cover all employees and all industries in response to the current pandemic. 
 
ARTBA, in a filing made less than two weeks ago with other industry allies, urged the court not to grant the request because workers are better protected from the virus by construction industry best practices rather than a rigid “one-size-fits-all” regulation.  The brief detailed why a uniform standard is misguided, explaining that “guidance on how to maintain the spread of COVID-19 in the aviation industry would naturally be quite different from guidance directed at the banking industry, or the construction industry.”
 
The court agreed, stating “[i]n light of the unprecedented nature of the COVID-19 pandemic, as well as the regulatory tools that the OSHA has at its disposal to ensure that employers are maintaining hazard-free work environments… the OSHA reasonably determined that an [emergency standard] is not necessary at this time.”
 
Established in 1902 and with more than 8,000 public and private sector members, the Washington, D.C.-based ARTBA advocates for strong investment in transportation infrastructure to meet the public and business community demand for safe and efficient travel.