5 Macro Trends Impacting the Future of the Building Materials Industry

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Steve Yates is the Executive Vice President of Enterprise & Industry Partner Channels at Buildxact. He’s also the chairman of Cliftonvale, a wholesale building material brokerage house, putting him in the epicenter of technology and building materials. He talks with Beth and Zach about the future of construction, including cutting-edge technology, new products and new innovation.

Buildxact is a SaaS, cloud-based software product that delivers a collaboration platform into the construction vertical. Within this platform, there are five primary stakeholders centered around the builder/remodeler. Downstream from them is the asset owner or homeowner. Upstream is the supply channels, manufacturers and associated trades. All of these people collaborate together on the Buildxact platform.

Steve started with Buildxact in late 2019, but he has over 25 years of experience in various supply chain roles. Within Buildxact, however, his responsibility is to deliver network connections between builders and their stakeholders to get a fit-for-purpose product into the market.

Deciding what macro trends are going to impact construction across North America that manufacturers need to pay attention to over the next three to five years is a big subject. As Steve puts it, “The way to eat that elephant is one bite at a time.”

Steve breaks it down into five areas: labor, building materials, regulatory environment, economic influences and environmental. In this episode, we go deeper into labor, materials and regulator considerations.

“It would be no surprise to any that I would say that we are massively short on our labor resource to be able to deliver our built environment,” Steve says. A common topic in the industry, the lack of labor is a problem across all segments. And as Steve points out, “it doesn't matter where you look, it doesn't seem that there's relief coming to this labor shortage.”

At this point, the industry needs to accept that we’re not going back to a new normal.

“If people are waiting for things to open up, they're probably going to be waiting a very, very long time,” says Steve. “Many of your sales members are probably going to age out, looking at retirement, and you're struggling to replace them. This is a significant factor in future planning your business if we're thinking over a five-year period. So how do you solve it?”

Thankfully, Steve has thoughts on how to solve labor issues. One way is to look for technology and tools, such as Buildxact, to help make the people who are available to work more effective and efficient.

You can also use these tools and technology to make your workplace more interesting. Many Gen Z and Gen Y workers are looking for jobs that they find interesting. They aren’t interested in the traditional sales roles that use an outdated CRM. They want to use dynamic technology that has exciting capabilities that they’re already used to as digital natives.

“Adoption of some of the principles around technology coming into construction is actually pretty positive in terms of workforce recruitment and diversity and inclusion that will help you solve some of that problem in the short term.”

The labor shortage plays into material considerations. Manufacturers need to consider how to design and create products that reduce the onsite labor needs. There’s also the consideration of complexity.

Many manufactured products are becoming more complex, which can affect procurement and delivery. This can especially be seen with configurators.

“Now, I've got a complex building assembly rather than a set building component. How do I make it easy for somebody to buy that, how to configure that assembly, buy it and introduce it into their total build and make it part of that building environment? This is a really interesting challenge because as we add capability into the product and complexity to subsidize the shortfall in labor, we're adding friction into the procurement process.”

Take a deck for example. Five to ten years ago, to get a deck that uses 12-14 different skews delivered through the vertical, the buyer had to range out all of those skews. Today, the manufacturing industry has consolidated that issue by creating one skew that includes all of the components (footing, deck planks, pier and post, rail, hangers, etc.). This solves a big problem, but has created another one: how do you configure that one skew?

As manufactured products become more of a construction services solution, rather than a commoditized product, they are both solving old problems and creating new ones. Make sure you’re thinking through all of the potential issues you are causing as you solve existing pain points or reduce existing friction.

As if a labor shortage wasn’t enough, the country is also facing a housing shortage and housing affordability issue. To deal with these, many states and cities are creating new regulatory conditions.

Steve gives coastal California as an example. “We've got all of the cities in coastal California getting heartburn trying to meet a state law that requires their housing element to deliver X number of housing units. And if they don't deliver to a deadline, all of their local municipal codes sunset and developers can come in and actually build to a state mandate without any local influence.”

You may have noticed that custom home builders and remodelers look more set for the next 18 months, and one of the reasons for that is regulatory. “The custom home builder and remodeler is much more adaptable or capable of addressing the infill build market than a greenfields developer is,” Steve explains.

Not convinced? Google “upzone single-family residential areas in the United States” and see how many municipalities are upzoning their single-family zones. Who do you think is best equipped to serve that market?

Don’t make the mistake of putting all builders in one box. Production builders can complete client-level negotiation because they are essentially duplicating the same box over and over. Custom builders and remodelers have to do project-level negotiation because each project is different.

Small builders and custom home builders are only going to complete a handful of projects in a year, so they often oversee every aspect of every product. That can be a pain point for them, and any pain point is an opportunity for the market to create a solution. For production builders, their pain points are all around fulfillment. For custom builders and remodelers, it’s about wrangling the different details on every single project.

By using technology and tools, small and mid-sized regional and local players can level the playing field and compete with bigger national players without a huge upfront investment.

One of the inside sayings at Buildxact is, “We keep our customers at the heart of everything we do.” Steve continues, “I don't know anybody who doesn't want to change something. Everybody wants to, when they get up in the morning, change something. And I also know that we mostly get up and worry about our own problems. If you could get up tomorrow and recognize, ‘Hey, I want to change something, but I'm gonna start worrying and thinking about my customers' problems more so than my own’ … it's a principle that will feed you forever.”

To learn more about macro trends to watch out for, listen to the entire episode here. You can reach out to Steve on LinkedIn or email him at stepheny@buildxact.com.

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