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Construction Risk Advisor – April 2018 - April 2018

RETAILERS INVESTING IN SKILLED TRADES TRAINING


In an effort to replace retiring construction workers and increase interest in the industry, retailers like the Home Depot and Lowe’s are sponsoring programs to increase trade skills. According to a study published by the National Association of Home Builders, out of the 74 percent of young adults who knew what career they wanted to pursue, only 3 percent had chosen careers in construction.

The Home Depot Foundation will prepare 20,000 new workers for careers in construction by donating $50 million to the nonprofit Home Builders Institute over the next 10 years. The Home Builders Institute will train high school students and disadvantaged youth in the Atlanta area, as well as military veterans and active U.S. Army soldiers planning to leave the service. About 75 percent of the trainees will come from the military.

Lowe’s also sponsors a program to increase trade skills, although its target is company employees. The program provides $2,500 upfront for trade skill certification in preparation for pre-apprenticeship opportunities with contractors in the Lowe’s network.

THE EFFECT OF TRUMP’S TARIFFS ON CONSTRUCTION


President Donald Trump’s decision to enforce a 25 percent tariff on steel imports and a 10 percent tariff on aluminum imports has rattled financial markets and sparked concerns about global trade. The construction industry is bracing for the effects of the tariffs, as it relies heavily on steel and aluminum for its projects. 

Analysts predict that U.S. steel makers will have increased pricing power as imports become more expensive. Since most aluminum is imported, costs are likely to rise. Although U.S. steel workers have praised the tariffs, the construction industry’s labor force could take a big hit. As many as 28,000 construction jobs could be lost, according to a recent study by The Trade Partnership.

For manufacturers of heavy equipment such as Caterpillar Inc. and Deere & Co., JP Morgan analysts predict that the tariffs could dent their fiscal 2019 earnings by 6 percent and 9 percent respectively. Steel is the largest raw materials cost for both companies.

The National Association of Home Builders has spoken out against the tariffs as it’s still recovering from the Canadian lumber tariffs of 2017. It claims that higher steel costs would raise construction costs, which could eventually be passed on to homebuyers.

Although Mexico and Canada are temporarily exempt from the tariffs, their continued exemption depends on negotiations to modernize the North American Free Trade Agreement. Canada is the largest exporter of steel and aluminum to the United States, accounting for 16 percent of imported steel and 41 percent of imported aluminum.