After (or even immediately before) major storms and floods, there is a surge of demand for items needed for protection, stabilization and repair, such as plywood, plastic sheeting and roofing, and replacement wallboard, lumber and window glass. There are frequently short-term shortages of gasoline and perhaps diesel fuel, because of higher demand, possible supply interruptions, and precautionary or panicky topping off of tanks. These impacts are usually short in duration and geographic extent; that should be the case this fall, when the U.S. has ample production capacity of many items, global demand is not as strong as in 2005, and logistics (distribution channels and freight transportation) are generally better. Some items that may take longer to supply, and therefore will delay completion of projects (even some projects far from storm-affected areas) are elevators, curtain-wall window assemblies, heavy-duty heating and air-conditioning equipment such as boilers, and other items for which there are few producers and demand has already been relatively strong (for instance, from high-rise apartment, office and hotel construction).

Harvey created record flooding over a heavily populated area; huge amounts of housing will need to be rebuilt, replaced or relocated. But, so far, there have been few reports of lasting damage to production capacity or infrastructure. This will facilitate rebuilding and re-employment of displaced persons.

Past events have shown the bulk of reconstruction and replacement construction takes many years (for instance, after Hurricanes Andrew and Katrina, Superstorm Sandy, and 9/11). Insurance claims may be settled relatively quickly but for far less than replacement cost. Many businesses and individuals will not rebuild and may defer or cancel spending (new homes, stores, etc.) they would have undertaken. Public funds for emergency housing and small business loans are disbursed far more quickly than assistance for private construction or appropriations for public buildings and infrastructure. While emergency funds are often additions to previous appropriations, funds for longer-term replacement projects may be offset by cuts in other construction in the region or nationally.

Thus, there is likely to be little, if any, increase nationally in construction spending beyond short-term repair and replacement in the affected areas. Other areas may receive less federal spending on construction than they would if the storm events had not occurred.

There is likely to be very limited medium- to long-term movement of construction workers to the affected areas, because demand for construction workers is high in most of the country. In AGC’s latest Workforce Survey, released August 29, 70% of 1608 respondents said they were having trouble filling one or more of 21 categories of hourly craft positions. (Click here for full survey materials, including results for 27 states with 20 or more respondents.) Job openings in construction are close to record highs and unemployment among former construction workers is near record lows. As a result, relatively few workers will transfer. But there will be upward pressure on wages as companies bid more to attract and retain workers, and pay more overtime to the ones they have.

In general, the damage to buildings and infrastructure from storms and floods depends on the intensity (wind speed; volume of rain, storm surge, stream and runoff flooding), duration, and geographic range of the event, as well as geographic features of the locations affected. For instance, most of the 10 hurricanes that struck parts of Florida in 2004 and 2005 had high winds that caused roof, window and localized flood damage, but the storms moved fast over a narrow path and caused relatively little destruction of infrastructure.

 

In contrast, Katrina caused catastrophic surges that destroyed levees and inundated a large part of a city below sea level, requiring lengthy rebuilding of housing, nonresidential buildings and below- and above-ground infrastructure. New Orleans still has not regained all of the population displaced by the destruction of housing and jobs. Katrina and Rita together knocked out some important plants producing construction inputs (PVC, titanium dioxide), along with shorter-term disruptions to supply of petroleum products.