Tracking Infrastructure

Top 3 Challenges of Construction Good Times

Posted by Jeff Pollock

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Sep 25, 2015 1:01:06 PM


Construction_Growth_ImageToday Bloomberg Business 
reported the statistics behind a trend already well known to manufacturers and construction contractors: The good times are back! In the second quarter the US economy grew at a very healthy 3.9% annualized rate on the back of exceptional growth in manufacturing and construction. Investments in new offices and factories were 6.2% higher and residential construction grew 9.3%. We have been hearing about this for some time from manufacturers and contractors who've been reporting that they are busier now than any time since the 2008 recession. This is great news, of course, but it also brings its own set of challenges. We have been hearing consistently about 3 particular challenges, so we thought we'd share them.

This time the return of the construction market seems to be different than the typical upswing of a regular business cycle. Our customers report that an evolution is required in the way business needs to be done. This presents itself in the form of three primary challenges:

1. Continuing margin pressure

Usually you expect that increased demand will allow better margins for producers in the short term, at least until more producers start getting into the market. This does not seem to be the case this time. In the infrastructure market this is most likely because the customer is in the public sector where budgets continue to be very tight. In the bigger view, though, technology enables more transparency which, in turn, demands more cost efficiency in both public sector and private sector projects.

2. Inventory management

This one is quite traditional. We hear customers and prospects say that increased volume presents the age-old problem of managing more inventory. They will take this problem every day over slow demand, but they also recognize that bloated inventories were the root cause of most of their problems in managing through the 2008 downturn. Most now want to be proactive about setting up systems to help make inventory logistics be more efficient and manage inventory control. 

3. Need to be productive everywhere

Operating under heavy margin pressure in responding to increasing demand requires manufacturers and contractors to be more productive than ever before. We hear people say that it feels like they need to produce more productivity in places that they never considered possible before. This is why lean manufacturing and lean construction initiatives are gaining very strong traction in the market. This is also why manufacturers and contractors are embracing technology like never before.

We've been saying for a while that the infrastructure market is in the early stage of an unprecedented opportunity for those who adapt to the challenges of evolving business practices. These are what we have observed from our discussions with manufacturers and contractors. What do you see?


About Idencia

Our purpose at Idencia is to offer infrastructure asset tracking solutions that improve productivity throughout the infrastructure value chain.. to create lean infrastructure. Our subscription offering applies RFID tracking to infrastructure products from the time of manufacture through end-of-life. As a cloud-hosted product tracking system that is seamless between manufacturers, contractors and asset managers, Idencia adds information value to all, eliminates redundancy and saves time. If you would like to learn how Idencia can help your company, we invite you to download a copy of our Idencia Primer ebook.

 

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Topics: Market Insights

About this blog

Tracking Infrastructure is a blog about innovation in the manufacture, construction and management of infrastructure.

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