COVID-19 IMPACT IN CONSTRUCTION INDUSTRY IN CALIFORNIA
California confirmed its first COVID-19 on January 25, 2020 in Orange County. Cases began to emerge across California and on February 14th, San Diego declared the first local health emergency after reporting two cases. Not long after, on March 16th, the Bay Area imposed the first Shelter-in-Place order for the counties of Alameda, Contra Costa, Marin, San Francisco, Santa Clara, Santa Cruz, and San Mateo (CalMatters, 2020). Only three days later, Governor Newsom issued a state-wide Shelter-in-Place order.
In the construction industry, these Shelter-in-Place orders impacted companies differently by region. While construction was deemed essential in most areas of California, Bay Area companies were limited to “public works”, housing, airport operations, oil refining, roads and highways, public transportation, solid waste collection and removal, internet and telecommunications” projects (Bernardi, 2020). These shutdowns, along with new COVID-19 safety guidelines, have taken a toll on construction companies across the state.
As a result, construction companies across California have been forced to quickly adapt to new protocols and regulations. Since certain areas of California have been more impacted by the pandemic, construction companies in those counties have been forced to comply with stricter coronavirus guidelines. The Bay Area has been affected the most by COVID-19 shutdowns and regulations. Then, Los Angeles County and San Diego County, which faced similar restrictions. The least restrictive area to build during the pandemic is the Central Valley, where there were less reported cases. Despite the difference in restrictions, the companies in this case study implemented many of the same COVID-19 protocols throughout all regions. In terms of business risk, the location of each company was not determined to be a factor. These conclusions were determined after conducting two rounds of semi-structured interviews with five companies located in various regions of California. Amid COVID-19 challenges, construction has performed better than most industries.
“After many bumps and bruises, construction has proven to be one of the better performing sectors of the economy over a difficult period,” said Bernard M. Markstein, president and chief economist of Markstein Advisors, who conducted an analysis for ABC of construction’s recent employment performance through September.
On the one hand, the economic uncertainty caused by the pandemic has hit specialty areas of construction hard. Many hospitality, restaurant, retail, entertainment and office projects that were in the works prior to COVID-19 have been put on hold or canceled. Developers have had to recrunch their pro formas on those deals using the pandemic’s new algebra, the common denominator of which is that any project that promotes mass gatherings — such as malls, movie theaters, restaurants, hotels and entertainment venues — gets carried over into the negative column. From that perspective, construction and its furloughed workers need more help — and fast.
More than a year has passed since the lockdown and the industry has been relatively fortunate. With its essential status, many projects which were underway at the start of the pandemic were permitted to continue, while providing much-needed jobs during a period when many workers in other industries found themselves on unemployment rolls. Now it’s time to reactivate the economy from the core, construction is one of the most important industries in the USA and in Environmental Construction Group (ECG) we are ready, regulation compliant and the best reliable call to get your project back in track.
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