Non-residential construction will be the stalwart of Michigan’s construction economy in 2024 as federal and state funds pour in for infrastructure investments.
Despite continuing pressures on profitability like high interest rates, tight lending, high costs and the labor shortage, the turbulence of recent years is expected to smooth out, spelling more consistent growth and opportunity.
Big investments in infrastructure, including roads, bridges and transit, promise to keep the industry buoyed in 2024 and beyond. The Federal Bipartisan Infrastructure Law, for one, is steering $11 billion Michigan’s way, including $7.3 billion for road repairs and $563 million to replace and repair bridges. And the state’s current, highest-ever budget ($82 billion in total) calls for $416 million in road repairs and $80 million for bridge replacements.
The challenge firms face, though, is in overcoming the roadblocks on the horizon to take full advantage of the business opportunities. Here’s what’s ahead.
Worker shortage saps industry’s vitality
There’s no sure solution to the construction industry’s shortage of skilled workers. Almost 90% of construction firms can’t fill open positions. Even if construction spending were to slow in 2024, some 342,000 workers will be needed to meet demand.
What can help is a sharpened focus on two fronts: safety and the wellbeing of workers.
Risk management key to resiliency threats
Defective products and faulty workmanship or maintenance and extreme weather delays cost the industry billions in expenses and lost revenues.
Rates for some lines of insurance will rise accordingly. However, across much of the Midwest, underwriters remain steady, even aggressive at times.
Firms that identify and address problems before they occur and can leverage their insurance program as a source of contingent capital will improve their long-term resilience and results. An experienced broker can help.
