Construction Ripe for Hackers
Cybercriminals are finding the construction world a great place to find targets flush with cash and short on cyber-security, according to Engineering News Record. Email can be used to divert funds being sent by wire transfer; when that happens, they literally vanish into cyberspace. Contractors, construction managers and owners worry about cybercrime, but often do not take the steps needed to fully protect themselves until after there’s been a data breach or some other problem. Today’s hackers often have day jobs with state-sponsored foreign agencies that don’t pay well; in their spare time they write ransomware and develop phishing scams.
Some experts say that phishing is the biggest risk because there are many financial communications conducted electronically. The FBI reports that more than $1.2 billion was lost to email-centered crimes against business in 2018. Hackers often get started by picking through stolen Gmail or Yahoo credentials which can be bought in bulk on the dark web. Hackers use the credentials to find people mingling business with personal and often using the same login credentials, which can get hackers into corporate email systems. Phishing emails often show up on Friday afternoons when internal personnel who might verify the request have probably left for the weekend, so the victim completes the task requested. In the most sinister of cases, they are coming from a real email account that’s been hacked, rather than one that has been spoofed.
Cybersecurity vendor Symantec says that ransomware infections were up by 12% in 2018. Microsoft Office files account for 48% of malicious email attachments; smaller companies are most at risk. Research firm Vanson Bourne surveyed 3,100 IT managers across the globe in December 2018, including more than 200 IT managers in the construction industry, and found that 68% had been victims of cyberattacks in the previous year and were unable to prevent the attacker from entering their networks. Larger companies saw more attacks, most likely either because they make more lucrative targets or that they are better at detecting the hack. On a more problematic note, 17% of IT managers didn’t know how long the threat had been in their system and 20% didn’t know how it got there.
Experts suggest companies turn to third-party experts for a systems analysis and security systems. The Center for Internet Security is a nonprofit that works to identify, validate, promote and sustain best practices in cyberspace. Limiting administrative privileges and monitoring network activity are critical.
Construction Goes Electric
Manufacturers see big potential in battery-powered equipment, but hurdles remain, according to Engineering News Record (ENR). Major manufacturers are seizing on recent advances in lithium-ion battery technology as well as improvements in the drivetrains and motors used in on-road electric vehicles. Volvo Construction Equipment has already pledged to cease development of diesel-powered compact equipment and shift the product line entirely to battery-powered electric beginning in 2020. A compact excavator and compact wheel loader will launch in mid-2020 initially in Europe and then eventually in other markets. Daniel Abraham, senior material researcher at Argonne National Lab, says that they do not believe there will be any breakthroughs that will replace lithium ion for at least another decade. One limitation is the fact that the batteries’ performance is affected by extreme temperatures. High heat shortens the life of the battery and extreme cold causes a big decline in performance.
California Construction Workers Getting Squeezed
California’s high housing costs may be contributing to a chronic shortage of construction workers. Only 18% to 23% of households can afford a median-priced home in high-cost areas, pushing workers out away from the coastal market and into the interior, where they face commutes up to six hours. Some firms are trying to provide temporary housing near construction sites. Competition between residential developers and commercial and municipal projects is pushing up wages as well as building and housing costs.
Home Remodeling Expenditures Slowing
Home remodeling spending hit a record high of nearly $425 billion in 2017 but annual gains are projected to slow in more than half of the nation’s largest housing markets this year, according to a report from the Remodeling Futures Program at the Joint Center for Housing Studies of Harvard University. Researchers estimate the annual growth in home improvement spending will fall to the lowest rate in three years in nearly half of the housing markets studied. There are also areas where remodeling is growing, including Orlando and Las Vegas. Regionally, the strongest growth this year is expected to be among metros in the West. Other factors include existing tariffs on materials such as timber, aluminum and steel that are driving up prices as well as cooling home prices, which reduces household net worth. In hot housing markets, the remodeling market is also very brisk, as there is generally a great deal of activity that occurs before a home is listed.
New Building Sector Technologies
A new expo and conference called AEC BuildTech was held near Chicago in early May to bring together attendees and suppliers and explore how best to implement new technologies in the building sector. Lessons shared included learnings about installing prefab bathroom pods from PIVOTek and mechanical/electrical racks and piping from Waldinger Corp. The event was sponsored by BNP Media, parent of Engineering News Record. Steve Jones, senior director of research at Dodge Data & Analytics, told attendees that the industry is one-third of the way through its digital transformation.
ENR Future Tech Conference
More than 700 industry technology professionals attended ENR’s three-day conference, Future Tech, in San Francisco to shop for new technologies, gain insights that will assist in strategic decision making and learn how other firms are innovating and solving problems. Interest and investment in construction technology has grown steadily in recent years. Research from McKinsey in 2018 identified growing activity centered around artificial intelligence (AI) and advanced analytics. Malicious hacking and ransomware are growing threats to the industry, and a panel of experts agreed that construction is lagging behind in cybersecurity. Rising materials prices and skilled labor shortages remain top of mind. A survey revealed that attendees were most concerned about the impact of modularization and improving decision-making in preconstruction. The increased use of robots and automation were seen as ways to close the skilled labor gap and bring down costs.
Understanding Gen Z
The 60 million members of Gen Z are those born after 1996. They started moving from college to careers this year. They come from the first post-9/11 generation and grew up with social media and smart phones. They’ve also watched their parents deal with a deep recession and a big housing bust, and they are coming of age in a time of deep political polarization and soaring college debt.
Gen Zers are expected to differ from Millennials, those born from 1981 to 1996, in many ways. Because of what they’ve been through, they’re expected to place greater emphasis on financial security, flexibility and workplaces that reflect the growing diversity of their schools and peer groups, according to an article in The Baltimore Sun. They describe themselves as “vocal” and not afraid to ask for what they want or speak up when they see a problem.
To attract young talent, employers are offering tuition assistance, virtual internships and flexible career paths. YouTube and visual media are the preferred method of learning for this generation. Studies show that about a third of Gen Z members spend four hours or more per day online watching videos. This generation has known the internet for their entire lives. They are therefore more skeptical, and more concerned about things like loss of privacy. They are self-starters and know how to find things. They are more independent than millennials, and less likely to have been raised by hovering “helicopter” parents. They are likely to question what is expected of them and be more frugal and averse to going into debt. They are eager to learn and try a variety of experiences so they can figure out what they are best at. This is also a generation that wants to make a difference.
Retailer Satisfaction Survey
Ace Hardware and True Value tied for the top spot among home improvement retailers, according to the J.D. Power 2019 Home Improvement Retailer Satisfaction Study. The two retailers tied for first with a score of 840 on a 1,000-point scale. Lowe’s was third with a score of 834. The overall score is based on performance in five areas: Merchandise, Price, Sales and Promotions, Staff and Service and Store Facility.
Some of the key findings included:
41% of home improvement retailer customers responding to the survey said they have either researched or shopped online before visiting a store. Those customers spend an average of $620 more per year than people who just shop retail.
Home improvement retailer websites are the most popular sources of information for these online shoppers. Overall satisfaction with a home improvement retailer website is 821 on a
1,000-point scale, lower than satisfaction with manufacturer websites (832) image and video sharing websites (843) or social networking sites (869).
Customers are willing to wait for two minutes for assistance in a store; when they are served within two minutes, there is an increase of 67 points on overall customer satisfaction scores. However, retailers provide assistance within two minutes just 26% of the time, down 2% from last year’s study.
One of the reasons the top-ranking retailers stood out was the ability of staff to consistently and thoroughly explain product features. Ace and True Value both performed significantly above the study average in this indicator.
Total sales for home improvement products are expected to reach $420 billion this year, up 5% from 2018, according to Chain Store Age. The study was based on responses from 2,433 customers who purchased home improvement-related products from a home improvement retailer within the previous 12 months and was fielded in January and February 2019.
The Battle for Low-Income Shoppers
Amazon is working harder to attract low-income customers, one of Walmart’s strongest customer groups. The Washington Post, which is owned by Amazon CEO Jeff Bezos, reported that Amazon is targeting low-income customers with new offerings, including a credit card for those trying to establish or rebuild their credit, half-price Prime memberships for people on some government aid programs and a way for consumers to reload their online accounts with cash at convenience stores. Walmart execs recently said that an estimated 18% of the country’s food stamps had been redeemed at Walmart stores, which would equal about $13 billion in annual sales. Walmart also offers check cashing, bill paying and other financial services for shoppers without bank accounts or credit cards and recently brought back their holiday layaway program. Consumers with household incomes of less than $50,000 do about 3.4% of their shopping online compared with 9.7% of households with incomes of more than $50,000, according to economists at Stanford University. And just 31% of those with an annual income less than $25,000 are members of Amazon Prime, compared to 60% of households making more than $150,000.
Speedy Delivery Competition
Walmart and Amazon are both working on ways to get packages to customers in one day or less. Walmart is determined to best Amazon when it comes to speedy delivery, according to a recent article in Business Insider. Walmart has filed 97 new drone patents with the World Intellectual Property Organization since July 2018. Amazon registered 54 new drone patents in the same time period. The range of the average drone is about 15 miles; around 90% of Americans live 15 minutes or less from their nearest Walmart store. Amazon’s drones could soon be delivering packages under five pounds. The fully electronic self-driving drones can fly up to 15 miles and deliver a package in under 30 minutes.
Digital Ad Spending and Shopping Trends
Amazon’s advertising revenue will reach $40 billion by 2023, up 470% from 2018, driven primarily by artificial intelligence and machine learning. MediaPost reports that Juniper estimates that the total ad spend on digital advertising will reach $520 billion by 2023, up from $294 billion this year. They estimate that the US ecommerce marketplace will surpass $129 billion this year, which would mean that Amazon will account for about 20% of all US retail ecommerce in 2019. EMarketer reported that 78% of US digital shoppers consider Amazon their favorite place to buy and shop online today, with 56% of them saying they would like to shop and buy more on Amazon in the future. Just 26% said they would like to shop more with Google. However, 47% of US digital shoppers said their favorite way to shop overall was in a physical store, and 42% said they would like to buy and shop more in real stores in the future. Voice enabled shopping, such as shopping with Google Assistant or Alexa, was reported as a favorite way to shop by just 2% of respondents today, but 6% said they would like to use voice platforms to shop more in the future.
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