Times of crisis are often times of change. Every new challenge is an opportunity for transformation. In an age of upheaval, the greatest virtue is a willingness to change. This also applies to the construction industry. Let’s take a look at the challenges that await us in the coming year, 2024.
New year – new… yes, what?
Recession. Skilled labor shortages. Material and supply problems. Massive backlog in housing construction. Major bankruptcies…
2023 was a turbulent year for the world in general and for the construction industry in particular. And to top it all off, the coming year, 2024, suddenly turned into a real surprise package. Anyone who tried to take a look at what exactly awaited us was suddenly blocked by a large, sluggish elephant. As if the challenges facing the construction industry weren’t already great enough, everyone was staring at the collapsed budget. The anxious question: What’s next? Which investments are even still safe? A T-Online investigation showed that the Ministry of Construction was particularly threatened by the bombshell from Karlsruhe. Several major positions at Klara Geywitz’s office were at risk: “€1.1 billion for climate-friendly new construction (KFN) and home ownership financing for families (WEF), €500 million for municipal heating planning, €150 million for the “Age-Appropriate Conversion” project, and €70 million for energy-efficient urban renovation. “
So here we are at the beginning of the new year , and the big bang from the Constitutional Court’s courtroom is still ringing in our ears. At least a compromise has been reached, but the view is still not truly clear.
In response to a request to determine which items would be affected by any cuts following the agreement, the Federal Ministry for Housing, Urban Development and Building stated on December 15, 2023: “Unfortunately, we must ask for your understanding that we cannot yet provide detailed comments on all subsidies and programs. For this, we must first await the deliberations on the 2024 budget in the German Bundestag and its final adoption.”
And this immediately reveals one of the greatest challenges facing the construction industry in 2024: patience . This applies not only to the large, sluggish elephant in Berlin, but also, and especially, to the industry’s problem child: residential construction .
Always the same old story: housing construction
When the 14-measure package was presented at the housing summit in September, which is intended to significantly facilitate the construction of new housing through, for example, better subsidies, lower construction standards, and tax breaks, the president of the German Construction Association, Wolfgang Schubert-Raab, said the package was a good start, but action must follow by the end of the year.ii Apart from the budget debacle, however, not much has happened since then. The problems facing housing construction have certainly not diminished. Quite the opposite.
The German Construction Industry Association (Zentralverband Deutsche Baugewerbe) expects 271,000 completed residential units in 2023. The forecast for 2024 predicts a further downward trend. Under current investment conditions, only 235,000 residential units will be completed by then. This is far from the 400,000 per year targeted and required by the traffic light coalition. Schubert-Raabe: “Something must be done, and now! We need the complete, rapid implementation of the 14-measure package and an interest rate support program for the EH-55 standard.”iii
But a purely political solution won’t suffice. Technological innovations are also needed. We must radically rethink the construction industry, especially residential construction. The key words here are serial and modular housing construction.
“A construction worker who built a complete house in 1991 can no longer do so in the same amount of time today. A VW employee who built one Golf in 1991 can now build almost two in the same amount of time. Or to put it another way: productivity per hour worked has actually declined in the construction industry over the past 30 years, while it has almost doubled in the manufacturing industry.”iv
In serial, modular housing construction, crucial work steps are shifted from the construction site to industrial production in the factory. Even large apartment buildings with 50 or more residential units can be completed in a very short time and with minimal manpower, following the principle of an IKEA assembly manual. It is obvious that the further development and implementation of this approach offers great opportunities, not only for society and politics, but also and above all for the companies involved in the value creation process. Pioneers of this process in Germany include our customers NOKERA and Goldbeck, who not only achieve outstanding results in this field but also inspire the industry with their visions.
The topic of serial and modular housing construction brings us directly to the intersection of another major challenge facing the construction industry in the coming year. We’re referring to a true evergreen and our own, very personal, final enemy: the shortage of skilled workers.
Paradoxical situation: An industry between a shortage of skilled workers and short-time work
Let’s clear up a major misunderstanding that we encounter time and again: We HR consultants can’t solve the shortage of skilled workers; we can manage it, meaning we can find ways to deal with it constructively. In this regard, the new year presents certain opportunities for the construction industry, which, however, come with a paradoxical situation. On the one hand, skilled workers are still desperately needed, while on the other hand, the poor order situation and the associated decline in the construction industry are leading to looming layoffs and short-time work.
The latter is primarily due to the lack of demand for residential construction. According to the German Construction Association, this leads to job cuts of around 30,000 employees expected for the entire industry next year.
One man’s loss is another man’s gain. Different sub-sectors are affected by the economic downturn to varying degrees. While residential construction is experiencing a massive decline, civil engineering (keyword: mobility and energy transition) and public building construction are experiencing slight increases. Here, it might be worthwhile to broaden one’s horizons and consider the possibility of lateral entry. Among the expected 30,000 workers laid off will be some who are highly qualified but currently out of demand in their field. These may need to be promoted and integrated elsewhere.
Above all, construction companies should not stop training. Even if the economy continues to weaken in 2024, construction needs persist, and demographic change does not stop periodically declining sales. This requires not only the patience already mentioned as a challenge at the beginning, but also strong nerves.
To give some encouragement at this point, let us quote Jan-Hendrik Goldbeck, who said the following in Markus Lanz’s talk show in December: “The good news is, we are now – and this is an irrefutable truth – two years closer to the next upswing than we were two years ago.”
Of course, it must be said: the coming upswing won’t automatically bring us more skilled workers. But it doesn’t necessarily have to either.
Digitize yourself, if you can!
As already noted, the shortage of skilled workers cannot simply be stopped, but it can be managed. The focus here cannot be solely on where to get more skilled workers, but also on how to reduce the need for them. The term modular, serial housing construction has already been mentioned. Here, certain production steps that previously had to be carried out by humans on construction sites are transferred to the factory and to machines. This is an example of how urgently needed labor can be saved. Digitalization offers great potential in this regard.
“Through targeted digitalization, around 30 percent of planning capacity could be saved—meaning fewer workers can achieve more in less time. Anyone who wants to stay competitive must therefore position their company more digitally! Thanks to digitalization, construction can not only be carried out faster, but also with fewer defects. It also offers a solution to one of the construction industry’s biggest problems: the shortage of skilled workers.”vi
There’s often a specter that increasing technological advancement will take people’s jobs away. Let’s look at the issue from the other side and say: good, more of it!
In 2024, construction companies ahead of the curve will accelerate their efforts to implement AI into all workflows – from material analysis, design, recycling, and project management.
“One key area where artificial intelligence is showing its full potential is document management and compliance with quality standards. Traditionally, this has been a time-consuming and error-prone task. By using AI, construction projects can benefit from everything from automatic document identification and organization to real-time quality standard monitoring. This not only speeds up processes but also minimizes the risk of errors.”vii
Implementing AI therefore makes things more efficient, saves costs and labor, and leads to greater sustainability.
Speaking of which, these are the benefits that increasing digitalization generally brings. Gone are the days of printed construction plans, the need to work in an office, and analog construction monitoring. The motto for the construction industry in 2024 should be: Digitalize, if you can!
Willingness to change enables us not to be driven, but to shape things.
The only question that remains is: Are you ready?
Florian Kugel
Editor and Quality Manager
The author
Florian began his professional journey in the skilled trades and eventually returned to it through writing. After training as a systems electronics technician at Deutsche Telekom AG, he worked as a freelance contributor to the Rhein-Zeitung and studied philosophy and German in Trier and Valencia. He began writing literary texts while still a student. After completing his master’s degree, he moved to Berlin, where he initially worked as a social worker in a refugee shelter and as a primary school teacher. This was followed by a period as a freelance author and editor, for publications including Spiegel-Online, Tagesspiegel, KaDeWe, and the Leibniz Institute for Spatial Research. Since the beginning of 2023, he has been an editor and quality manager at Riverstate Personalberatung.
