The construction industry is continue to feel the effects of the COVID-19 pandemic. Despite mass cancellations and pleas from government officials- the ConExpo in Las Vegas went on as scheduled. Plus, the housing market is looking more and more unlikely to weather the storm.
- The ConExpo in Las Vegas went on as scheduled- despite massive cancellations across the US
- The hottest markets in the country may take the biggest hit during the COVID-19 Pandemic
- Researchers in Washington State have created a brick made from drywall waste
- Home Depot continues its push towards attracting the "professional customer"
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Full Episode Transcription
Welcome back to The Construction Cut- it's been an odd week here in the US and across the globe- we're seeing precautions being taken in the form of event cancellations and postponements- everything from the NBA and the NHL to movie releases and marathons. COVID-19 is undoubtedly the most important story this week- and rightly so. We're taking the precautions that we can at Builder Funnel- a few of our team members work remotely full time- but our in-office team is going to work from home until at least the end of March. We're lucky that our job as digital marketers allows us to do so. When it comes to the remodeling industry, our home builders, our construction industry folks- working from home is a little trickier. We're starting to see the impacts of COVID-19 hit our clients in real-time. Home tours are being canceled, and potential remodeling clients are canceling in-home meetings.
A few days ago, we released a podcast on how you can prepare your business to go online, and why it's essential to keep your pipeline and your sales funnels engaged and educated while everyone is retreating and turning in. There are some useful nuggets in there that you may find helpful if you're in a leadership position or want a few tips on working remotely. That being said- I've rounded up the latest news from the last few days. Let's get to it.
It's Monday, March 16th, 2020. Let's dive in:
Fears over the virus have taken down the rest of the NBA season and canceled March madness... But not the ConExpo. The massively popular construction expo in Las Vegas, which only happens once every three years-- could not be canceled in time. The show- one of the city's most prominent- takes up an astonishing 2.7 million square feet of space with hundreds of large machines and over 130,000 attendees. Since the event is only held once every three years- the exhibition of mining and construction equipment could not easily be postponed, so the show goes on. With new construction booming and thousands of construction-related jobs being added every month- it makes sense for both domestic and global companies to share their latest products and technologies to construction companies and attendees. According to attendees on the ground at the show- organizers instituted a no-handshake policy and gave out buttons with a symbol of a handshake with a red x marked through it. Despite the shows precautions- many key players were noticeably missing. Analysts, shareholders, and investors- the folks that buy the new products and come to hear the latest presentations- were noticeably absent.
One thing that's also been impossible to ignore is the volatility of the stock market. The DOW has plummeted-- in fact--last week trading stopped altogether, twice. Between the virus, and the situation with oil- the price war between Saudia Arabia and Russia-- the market seems like a veritable rollercoaster- and it is. But, several sock market analysts have given the green light to buy buy buy Lennar-- Lennar is a home construction and real estate company out of Florida. As of 2017, they are the largest home construction company in the United States, and as of 2019, they are ranked 154th on the Fortune 500. So-- good things could be on the horizon for Lennar- and other home building companies with capital.
My coworker Danielle always talks about feedback sandwiches... One good piece of feedback, one bad piece of feedback, and another negative piece of feedback. So- here's the bottom half of the sandwich. The US housing market- poised to be strong as ever going into spring- may not be so healthy after all. We are, of course, facing an unprecedented economic disruption- so this isn't unexpected. It is, however, an incredible disappointment after a wildly promising season. Mark Zandi, the chief economist at Moody Analytics, says that such an economic disruption will batter the housing market, despite lower-than ever mortgage rates. Zandi said that "Housing is being buffeted by two gale forces moving in opposite directions". He's referring to low rates and virus-fueled economic uncertainty. He goes on to say- "The question is, what's the end result of all that? In all likelihood, the recession will trump the lower rates." The virus is hitting at the most inopportune time. Just a few weeks ago, I reported on higher than average winter temperatures, and how low mortgage rates have driven potential homebuyers out in droves. Despite a dwindling lack of inventory- the market was strong. Really strong. But as the stock market has taken a dive, taking oil prices down along with it-- several states that depend on things like energy- may stop home buyers in their tracks. Right along with home buyers that rely on their stock market investments for sizable down payments.
If the vast majority of Americans stay home- forgoing vacations and movie dates and whatever else- people may lose their jobs. As it stands to reason, that economic turmoil, the disruption of everyday life- will probably slow home sales. Economists are saying that financial hit from the coronavirus could send home sales down 10%- in the short term. The cities most vulnerable? Those with high paying jobs- like Seattle and San Francisco. Zandi says: "The housing markets out West are really juiced," he said. "If things don't stick to script, those overvalued markets are much more vulnerable to price declines. "If there is a marked economic slowdown accompanied by job losses, that would put a lot of pressure on homeowners," he said. "We would see a change in the inventory situation. Instead of a severe shortage, you would start to see inventory ramp up as people get interested in offloading."
Alright- this next story might be a little self-serving because I graduated from Washington State (commonly known as Wazzu)- but this is pretty interesting. A group of researchers at Wazzu is developing a solution for drywall waste. So here are the details- according to the research team in Washington, drywall can only be recycled if it's turned into fertilizer- which leads to a recycling rate of less than 20%- at least in the state of Washington. In fact, nearly 10 million tons of drywall waste goes into landfills every year.
So- what does this all mean? Well- the researchers at Wazzu created what they are calling a drywall waste block (DWB). Basically, its a brick made up of old drywall- and it looks like any cement block you buy at the store. Now that the researches have finalized this product- their next step is to chat with construction companies on how they can tailor these blocks to large-scale construction projects. The researchers at Wazzu hope that a manufacturer will take the helm and license these projects- so companies can start using them in the next the two or three years.
Our final story of the week- Home Depot. Home Depot is continuing its plan to focus on the professional customer. The home improvement retailer has been taking steps toward developing a "pro ecosystem," and their new B2B online website has reportedly onboarded a million pro customers already. The pro website is geared towards businesses- enhancing their digital offerings and creating a better-interconnected shopping experience. Their recent upgrades include the ability to link purchases made at the store and online right into QuickBooks. It is also planning to launch a CRM.
That's the news this week- I'll be back next Monday with another roundup. I've linked this week's resources and full episode transcript in the show notes if you want to learn more about any of the stories I've covered. Just swipe or tap over the cover art. If you're enjoying the show- I'd love for you to give us a review or subscribe to the show on Apple Podcasts- or if you're an Android user- subscribe on Spotify, or wherever you listen to podcasts.