Construction is in demand – but who's going to do all the work?
The construction business is looking strong this year and many firms – both big and small – are planning to hire. That’s the conclusion from a study released this month from the Associated General Contractors of America and construction software company Sage.
About a third of the survey’s respondents, who work at more than 1,000 firms from 48 states, expect their segment of the construction economy to grow this year, as opposed to 11-21% of respondents who don’t. The segments with the highest positive growth numbers include water and sewer, bridge and highways, schools and hospitals. Segments including transportation (ie transit, rail, airports), higher education and federal projects also had strong positive readings.
It all sounds great, except for one thing: who’s going to do all the work?
“Contractors are very optimistic about demand for construction in 2020,” said Stephen E Sandherr, the association’s chief executive officer. “At the same time, many construction executives are troubled by labor shortages and the impacts those shortages are having on operations, training and safety programs, and bottom lines.”
It’s an issue I hear from just about all of my clients – finding and keeping good people in this environment of very low unemployment. Unfortunately,
like industries that rely on lower paid workers, it hits the construction sector hard. Eighty-one per cent of respondents to the survey said they were having a difficult time finding workers and worker quality and shortages are affecting three-quarters of the businesses asked.
And, like Sandherr noted, these problems have a reverberating effect on the industry and the economy as a whole. About 44% of the survey respondents said that scheduling challenges and project delays caused by labor shortages are driving up costs and lowering their profits. It’s not only affecting the time frames of projects but putting pressure on business owners in the industry to increase their prices.
Despite these challenges, more than three-quarters of these firms still expect to increase their headcount this year. How?
Many of them are investing in training programs, increasing pay and bonuses and funding technology like drones, robots, 3D printers. They’re putting money behind project management and fleet tracking software to increase productivity and cut down on labor costs as well as revisiting how they plan jobs by using “lean” construction techniques and building models to better forecast their projects.
They’re also begging Washington for help.
The industry wants increased funding for career and technical education and help to make it easier for people enrolled in short-term construction projects to qualify for federal Pell grants. They’re also pushing their legislators for more immigration relief, like a temporary visa program for construction workers and the protection of the legal status of certain immigrant workers who are already here, as well as taking steps to reduce the number of illegal immigration that are exploited by unscrupulous managers to outbid their competitors.
“Washington officials must take steps to prepare and place more people into high-paying construction careers,” Sandherr said. “They also need to recognize the need to allow more people to lawfully enter the country to address workforce shortages while the domestic pipeline for preparing and recruiting workers is being restored.”
Is begging the federal government for relief the answer? Maybe in the long term. But I wouldn’t expect any big changes coming out of Washington this election year. So business owners in the construction industry – like many others – will need to continue to compensate more and innovate new ways to find and keep people. I know it’s a problem. But when you put things into context, it’s a good problem to have.