Market Trends November 2022
Contractors Feel Skilled Labor Shortage
More than half of US home and building contractors (55%) feel a lack of skilled workers is a barrier to growing their current business, according to a new survey, Powering the Future, fielded by Stanley, Black & Decker’s DeWalt brand. More than half of larger contractors ($10 million plus) feel the need even more, with 69% agreeing.
Mentor Programs Matter. A great deal of importance is placed on mentorship programs regardless of contractor size, tenure, or type, with 67% of all contractors labeling these programs as extremely important and an additional 24% identifying these programs as moderately important.
Longer Days the Norm. Most contractors (56%) have been working more hours since 2019, with mechanical (68%), plumbing (66%) and electrical (60%) contractors more likely to have seen an increase in labor hours since the pandemic began. Nearly 40% of all contractors surveyed say longer hours have made their jobs more difficult.
2023 Forecast. Half of contractors identify training the next generation of workers as one of the most critical industry focus areas in 2023 and beyond. The second and third most critical elements for growth are contingency planning/risk management and resilient supply chain solutions (both 37%).
Tool and Equipment Innovation. Also indicated as an important element of future success is the innovation of tools and equipment (33%). With tool advancements, 55% of contractors feel they have increased efficiency, half (51%) state they have increased user control, and over a third (36%) think tool innovation has improved the quality of work.
What’s Up and Down with Lumber?
Lumber prices have fallen to their lowest level in more than two years, bringing two-by-fours back to what they cost before the pandemic building boom and pointing to a sharp slowdown in construction. For two years, climbing lumber costs lifted home prices. Now home builders say that cheaper wood is giving them wiggle room to offer buyer incentives and to trim prices without crimping their profit margins.
Wood-pricing service Random Lengths said its framing-lumber composite index, which tracks cash sales in several species, fell to $520, down more than 60% from early March. Now that supply issues have eased and the highest mortgage rates in more than a decade have slowed home sales, buyers are no longer hoarding lumber for fear of running out.
Forest Economic Advisors forecast that lumber consumption will decline by as much as 2.5% this year and fall up to 4.5% in 2023 as home construction stalls and remodeling demand reverts to normal following the pandemic renovation boom.
However, wood prices are expected to remain in the $400s per thousand board feet due to record-low inventories among dealers and rising mill costs, especially in British Columbia, where forest fires, wood-boring beetles and conservation efforts have reduced the supply of logs. That’s below the break-even price of $500 per thousand board feet in Canada, so mills there may cut back output.
Holiday Hiring Plans
Amazon plans to hire 150,000 seasonal workers, about the same as last year despite slowing sales and predictions of a lackluster holiday shopping season. Employees can earn more than $19 an hour, on average, based on their position and location in the US. Walmart plans to hire some 40,000 seasonal workers this year, down from 150,000 in 2021. Meanwhile, the third-party merchants who account for more than half of Walmart’s online sales fear it will be a dreary holiday shopping season. Some expect to cut prices to move unsold inventory. It's an abrupt change from 2020 and 2021 when sellers were scrambling to get enough products into warehouses to meet pandemic-fueled demand and chronic shortages let them increase prices.
Online Sales Forecast
This year, US online sales are expected to rise just 9.4% to $1 trillion, the first time growth has slipped into the single digits, according to Insider Intelligence, which in June lowered its earlier annual forecast. Spending on Amazon will hit $400 billion, up 9% and slower than the overall industry, the research firm says.
Target and Amazon started promoting holiday deals in October, and Walmart announced special deals and terms for members of Walmart+.
CEOS Bracing for Recession
American CEO confidence has plunged to its lowest levels since the Great Recession of 2007–09 as central banks scramble to tame decades-high inflation, according to the results of a survey. Almost 98% of US-based CEOs say they are preparing for an economic recession over the next 12 to 18 months, according to the quarterly survey of business leaders conducted by the Conference Board. The number rose to 99% for CEOs based in Europe. The vast majority still expect the US recession to be short and shallow, but nearly 7 in 10 believe the EU will enter a deep recession with serious global consequences. Of the CEOs polled, just 5% felt economic conditions would improve over the next six months. Meanwhile, 81% said the economic outlook is worse for the fourth quarter than it was in the previous quarter.
Lowe’s Tech Hub Targets Omnichannel Innovation
Lowe’s recently opened their tech hub, a $153 million, 25-story tower in Charlotte, North Carolina. The immense 367,000-square-foot space can house up to 2,000 employees, about half of which have been hired to date. Lowe’s tech hub was designed with innovation in mind. Lowe’s thinks a state-of-the art hub dedicated to fostering creativity will help them attract and retain top tech talent.
Everything from furniture to wall colors was designed to encourage creativity and individualism as well as collaboration. Large demo areas can showcase technology and tools in development. Conference rooms open to the workspaces with glass garage doors.
There’s also a mock store set up that allows Lowe’s to test their digital twin technology in a virtual, 3-D replica of a physical store. Lowe’s is developing augmented reality goggles to allow employees to visualize and interact with data allowing them to improve store layouts and operations.
Lowe’s CIO Seemantini Godbole has been working on positioning Lowe’s as a tech leader since she was hired some four years ago. She says it is necessary to create products to help their 300,000 associates assist customers and be more efficient. Lowe’s also must serve the millions of shoppers that interact with the company daily to better navigate everything from buying a refrigerator to replacing floors. Above all else, technology needs to be easy to use.
The High Cost of Employee Turnover
It costs Amazon $8 billion annually to lose and replace workers, according to internal documents leaked to The Independent. One of the recommendations is that Amazon start using tracking data to help them keep more employees. People are reportedly quitting at twice the rate that they are being fired or laid off across all levels and businesses and in 2021 only one in three new hires stayed with Amazon 90 days or more. Lack of opportunities for career development and advancement were one of the primary reasons for leaving
Canadians Not Interested in Digital Skills
Workers with advanced digital skills gain advantages in pay, job security and overall employment quality, according to a report from Amazon Web Services and Gallup, but Canadians are below average in their desire to acquire these skills. Among workers surveyed in 19 jurisdictions, Canadians ranked 12th in their interest in training in areas such as cloud computing, software development and AI. Workers in India, Thailand and Indonesia topped the chart. AWS, which sells cloud-computing services, emphasized findings in the report that companies that use cloud computing are more likely to be innovators, and urged employers to subsidize digital-skills training and give workers time to pursue it. That could be a difficult pitch in a tech labor market that has been characterized by layoffs, even as the overall job market stays tight.
Consumers’ Preferred Digital Payment Options
PayPal (58%) was the top choice, followed by credit (51%) and debit cards (47%), according to a survey from retail operating system provider Brightpearl that asked consumers how they prefer to pay online. Other digital payment options cited by respondents included Amazon Pay (32%), Google Pay (29%), Apple Pay (26%), Shopify (19%), and Klarna (16%). Amazon is expanding their digital payment options and will start to accept PayPal-owned Venmo payments for online and mobile app purchases.
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