The Economic Characteristics of the Building Trades
Building construction is carried on in an environment which is unique in the American economy. Despite the fact that it is one of the largest industries in the country, construction displays few of the characteristics which are normally associated with size and importance in the United States. It has none of the cohesiveness and integration, for example, which characterize the automobile and steel industries. Most of its firms are small and the markets for its products are largely local in nature. The managerial function, so important in modern American enterprise, is diffused among various component parts of the industry and in some important respects is exercised by groups or persons that are quite outside the building business. Despite rapid and significant advances in building methods in recent years, the industry has not adopted the mass production techniques characteristic of most other manufacturing sectors of the economy.
These rather striking differences between the construction industry and others have often been pointed out as "evidence" of the existence of restrictive practices, managerial inefficiency, and other commonly alleged deficiencies in the operations of the business. While such deficiencies may exist, they do not in themselves offer an adequate explanation of the characteristics of the industry. Rather, the unique nature of building operations stems very largely from far more basic economic factors. The nature of these factors, together with an analysis of their relationship to the operations of the industry, constitute the subject matter of the present chapter.