COVID-19 Impact on Building and Construction in the Chemical and Materials Industry

COVID-19 Impact on Building and Construction in the Chemical and Materials Industry

  • Chemical and Materials
  • Sep 28, 2020

COVID-19 Impact on Building and Construction in the Chemical and Materials Industry

INTRODUCTION

In today's time, the Novel Coronavirus or the COVID-19 is spreading on a wider range and there is no place which is remaining unaffected by this pandemic. Due to the pandemic, all the commercial activity is suffering. Some industries have a blooming effect while some industries are highly affected such as the construction and engineering sector.

Construction and engineering sector, which was already reeling with multiple challenges from lack of capital and credit avenues to insolvencies, multiple frauds and regulatory burden under the environment laws and the Real Estate (Regulation and Development) Act, 2016, is now marred by the COVID-19 pandemic, with no likely relief in sight.

As, most of the European and Asia-Pacific countries such as India, Germany and Ireland among others imposed a strict lockdown and resist the movement of the consumers from one place to another. However, due to the restrictions all the construction activity in residential and commercial sectors across the world has halted.

COVID-19 IMPACT ON BUILDING AND CONSTRUCTION IN THE CHEMICAL AND MATERIALS INDUSTRY 

Developed countries such as the U.S. relies on the shipments of 30% of its construction materials such as steel, iron, insulating materials, wood, stones, copper, aluminum from China. As, due to the disruptions in supply chain from one country to another and reductions in imports and exports of goods widely affected the building and construction industry.

The governments of various countries have halted various business activities to reduce the spread of novel virus. However, the building and construction activity is halted in initial days of lockdown only but the government permits the most of the construction activities to resume in the second month of lockdown in most of the countries. The health and safety risks of COVID-19 vary from project to project such as consumers who are working outside in an open field and are taking proper safety precaution and are not physically in touch with each other are in the low risk as compared to the consumers who are working in the corporate and offices.

The construction companies are taking all the safety measures and provident their employees with the safety kits, hand sanitizers, masks before they initiate their work but this is not enough to stop the spreading of virus. In various counties where construction activities are essential, restrictions to public transportation detrimentally impact workers ability to work. Many construction companies already implemented the travel bans for the employees originating from high-risk states which will led to the shortage of the labor.

Even in cities and states where construction activities are considered essential, restrictions to public transportation and the closure of schools, child care facilities and businesses is expected to detrimentally impact workers’ ability to work. Various construction companies, site owners and contractors are already implementing travel bans for employees or travel restrictions on those workers originating from high-risk states. It is inevitable that the progression of some projects will be impeded by a shortage of skilled labor.

IMPACT OF COVID-19 ON CONSTRUCTION INDUSTRY IN INDIA

Countries from all over the world are taking strict and extreme measures to break the chain of Coronavirus. In India which is currently in the Phase-2 status of COVID-19 where most of the industries provides the work from home to their employees to reduce the spread of the virus. The lockdown in the country lead the falling of economy of the country.

Towards the end of the Financial Year 2019-20, there were several measures taken by the government to enhance the growth and demand of the real estate sector. However, due to the Coronavirus spread, there are chances of decreased demand in the realty segment which includes sales, project launches as well as price growth. In India, total spending in the construction activities fell 1.3% during February, as residential (-0.6%) and nonresidential (-1.8%) activity both slipped. The drop follows a huge 2.8% jump in construction outlays in January, which was revised up a full percentage point from the previous report.

As compared to last year, residential property sales have dropped on a wider range from 78,510 units in 2019 to 45,200 units in 2020. The sales of residential as well as commercial sectors declined by 30% in major metropolitan cities. In Mumbai, there were a huge declination of 42% in the sale of units and on the other hand, Bengaluru, Pune and Hyderabad’s sales decreased by 25%. As due to the huge drop in the sales most of the companies are not taking new construction projects due to the crisis and reduction in the supply of the construction materials as well as a shortage of labor in the country which is causing a huge loss. The country has faces a loss of USD 14.17 billion in 2020.

For Instance,

  • In April 2020, KPMG announced that more than Rs 59 lakh crore construction projects in India are under development and impacted severely by COVID-19

IMPACT OF COVID-19 ON OVERALL CONSTRUCTION PROJECTS

The construction industry will see massive layoffs as due to huge loss most of the project handled by private companies will take time to complete. Most projects in New York, Pennsylvania, Vermont and Washington states of the U.S. have come to a halt. At the local level, work stoppage directives have been mixed. In March, Boston state shut down all construction, and other areas in Massachusetts.

In May 2020, the construction activities in Europe rises by 21.2% as compared with the month of April but as compared to previous year the number is fallen by 10.3%. In European countries, most of the companies re-started their construction work and started taking new projects, due to which the construction activity increases with the rate of 27.9%.

In May 2020, According to the report published by Construction Pros.com, 38% of construction project owners halting projects underway in March, with 10% cancelling projects altogether. In April more than 31% construction cancelled or halted all over the world. Another 16% of respondents reported cancellations already for projects scheduled to start in both May and in June.

  • All the companies are taking extra precautions against COVID-19, as it has left its imprint in many ways on construction activity. Only 50 per cent of the total capacity on a bus can be used to transport workers to the construction site. This means multiple trips to handle a single shift. The number of shifts and the hours on site has reduced as anti-contamination processes require time.

Construction industry sources say, going the extra mile on COVID-19 precautions makes sense, both from a wider social and business perspective. If doing so helps limit downtime at construction sites, it ends up as a big plus eventually.

COMPANIES STRATEGIC INITIATIVES DURING COVID-19

Although COVID-19 is expected to interrupt the entire building and construction industry as most of the Asian countries have started planning to resume their business and life after COVID-19. In China, after the lockdown most of the economic activity and construction activities have rebounded. Most of the companies are expected to ramp up infrastructure construction post the pandemic situation to stat their revenue growth.

In May 2020, various developed as well as developing countries such as Germany, U.S., India, the construction of buildings showed an increase of 20.4% as compared with April 2020. The increase in civil engineering projects will be around 22.4%.

CONCLUSION

The Covid-19 crisis widely affected the building and construction activities all over the world. As the government imposed lockdown all the construction activity has come to a halt which lead to the huge loss for both the country and manufacturers. Most of the construction workers already headed to their homes and doing other work and they are not willing to return and resume their work again which causes the shortage of labors in urban areas.

The impact of the halt in work will have direct bearing on the company revenues, jobs and project delays. After agriculture, the construction, infrastructure and real estate segments are the second-largest employment providers in the country, and they have been affected by the lockdown imposed due to virus breakout. Most of the manufacturers resume their work and started taking new construction projects with proper safety measure and precautions so that their employees will remain unaffected with the virus.

Most of the countries are importing their construction materials from China and other countries and due to the restriction in the export and export of goods from one country to another is widely impacting the construction activities.

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