By Sebastian Obando
Almost all economists and contractors expect some sort of an economic slowdown this year.
Some have even baked a recession into their current forecasts. But the unanswered question on many observers’ minds remains how this downturn will be different.
“Our early signs, like most contractors, is that a slowdown of some sort is coming as our projects are pushing to later time frames,” said George Pfeffer, member of the management committee team at DPR, a Redwood, California-based commercial general contractor. “We’ve been through several of these cycles and what we can say is there’s always something different.”
Pfeffer points to workforce shortages and volatility in commodities markets. Material costs’ trajectories play an important role in procurement strategies, he said.
For example, electrical manufacturers and distributors told DPR there is currently a $1.5 billion order backlog of switchgear, components required to provide electrical power and distribution on a projects. As a result, DPR expects shortages in metal sockets and bus plugs due to this high demand, said Pfeffer.
“In terms of new work opportunities, we expect a more challenging market,” said Pfeffer. “There is a lot in the mix, and we expect that to be sorted out in 2023, which may mean fewer customers moving forward on projects until there is more certainty.”
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