A Lutherville, Maryland-based basic contractor simply posted its largest backlog in firm historical past.
MacKenzie Contracting’s building arm tasks its 2023 income to hit $48 million, a rise of about 45% from final 12 months, in response to Marty Copsey, its president and chief working officer. The development agency focuses on healthcare, retail, workplace and senior residing tasks.
That mirrors an total business development. Development backlog elevated 0.2 months to 9.2 months in February, hovering round highs not seen because the begin of the pandemic, in response to Related Builders and Contractors.
However whereas backlog stays at a traditionally elevated stage, fading financial momentum may hamper each the longer term building pipeline and confidence.
Right here, Copsey shared his issues with Development Dive that continued rising prices of supplies and labor, mixed with unsettled rates of interest, may stall sure tasks.
Editor’s be aware: This interview has been edited for readability and brevity.
CONSTRUCTION DIVE: What are some main headwinds that might put a dent on MacKenzie’s robust backlog?
MARTY COPSEY: With many firms embracing distant or hybrid work preparations, there was a dramatic lower in workplace building. Within the Baltimore-Washington, D.C. area, this has been offset by sturdy exercise within the medical, healthcare, training, retail and senior residing classes.
Retail is rising with fast serve restaurant chains together with Elevating Cane’s and Bojangles now coming into the Better Baltimore market.
Marty Copsey
Permission granted by MacKenzie Contracting
Senior residing is a market that doesn’t see any down time, and in Maryland, there may be undoubtedly a senior second occurring now.
The Silver Tsunami is in full swing with greater than three million folks retiring on an annual foundation and that additionally interprets to extra folks coming into senior residing services and retirement communities. These tasks are filled with facilities.
Probably the most difficult points we at the moment face are studying to navigate the brand new regular with regard to longer lead occasions for supplies, unpredictable pricing and labor shortages. The business is at the moment strained by this.
What’s the sentiment on supplies pricing? Is the expectation that it will worsen earlier than it will get higher?
Some supplies similar to lumber and metal are leveling out, whereas different materials prices are persevering with to creep up. Copper piping has elevated greater than 10% because the begin of the 12 months.
Lead occasions proceed to be a problem, led by electrical panels and switchgear which take 26 to 30 weeks for supply whereas rooftop air dealing with items are 48 to 52 weeks for supply. Additionally, stable wooden core doorways are taking 20 to 24 weeks to acquire.
Ongoing communication with the shopper, in addition to anticipating issues, is at all times the important thing in avoiding potential delays.
I’m listening to from others within the building business a rising concern round financing for building tasks. Is that a problem MacKenzie sees taking place as nicely?
Development financing is tougher and costlier to acquire. Rising rates of interest together with elevated supplies and labor prices are sidelining some tasks already underway in addition to stalling the beginning occasions for some new building tasks.
We’re concerned in smaller scale tasks and inside renovations that aren’t seeing a drastic impact from rising rates of interest and prices proper now. However that may additionally change in a single day.
Are there every other developments happening in building you are feeling are necessary to say?
Provoke architectural design companies earlier to plan for the present elongated building timelines.
Additionally, the rising presence of girls within the workforce is being felt. Girls now comprise practically 11% of the workforce at a building web site in the US, and girls working in building and commerce earn 30% greater than these working in additional conventional, women-dominated jobs.
Moreover, building firms that make use of ladies have a 25% chance of attaining above-average profitability, in comparison with companies with out ladies. MacKenzie Contracting Firm is doing our half with a workforce that’s roughly 30% ladies.