Louisiana and surrounding areas are continuing to deal with the fallout from Hurricane Ida, which ripped through the southeast section of the state in late August. Contractors in particular are facing challenges, amplified by preexisting supply chain issues and labor shortages, as they return to jobsites and begin the rebuilding process.
U.S. industrial production grew slightly in August despite the storm, but slowed with only a 0.4% gain, according to Wells Fargo. Manufacturing rose 0.2% last month, but would have increased more were it not for Ida. "The Louisiana economy is still on the mend from the pandemic-induced downturn, and the hurricane damages will only serve to prolong the region's recovery," Wells Fargo says.
The struggle to find skilled workers and materials only adds to the complications facing the construction industry following the storm. However, while construction has slowed some, rebuilding has not completely halted, said Roxanne Price, CCE, CCRA, corporate credit manager at H&E Equipment Services, Inc (Baton Rouge, LA). "We had to help many of our customers by making sure they had generators and other essential equipment units, so they could continue to work," Price said. "We had to think outside of the box to help our customers and support them."
For some, the storm may also delay payments from debtors. "[Hurricane Ida] has affected the mail, so payments are coming in much slower and many of our customers are still struggling to get internet access," said Mary Lou Schwartz, credit manager with Ferguson Enterprises LLC (Metairie, LA). But for others, it may still be too early to see the full impact Ida will have on customer payments, Price said. "Business is still thriving and there is still a lot of work going on."
Henry D'Esposito, who leads construction research at the real estate services company JLL, told the Associated Press that the delays in acquiring certain materials like drywall, glass, steel and aluminum is throwing a wrench into their rebuilding plans. "A lot of the materials that you would need for any project and especially something this urgent — you're not able to get on site for weeks or months," D'Esposito said.
The cost of rebuilding is more expensive now too, thanks to skyrocketing construction material costs. Combined prices for windows, doors, roofing and other building products jumped 13% in the first six months of this year, according to Labor Department data. Labor costs are also higher and the longer construction projects are delayed; the longer workers need to be paid.
However, creditors should be cautious of outside contractors taking advantage of the labor shortage and the various jobs created by the hurricane, Price said. "We have to be very careful after hurricanes and storms because sometimes you'll get general contractors who are just looking for work but aren't necessarily the best customers," she said. "You have to keep your guard up and still make sure you are doing a complete credit check."
-Annacaroline Caruso, editorial associate