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Desperately Seeking Craftsmen - Construction Industry Labor Gaps Get Worse

04/05/2017 11:12:00 am | Viewed: 730

Texas Construction News from Virtual Builders Exchange

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Skilled labor shortages in the construction industry are raising project costs and may put the nation's economy at risk.

 

Posted: 4-5-2017, 1:25 p.m.

by Edmond Ortiz

Skilled labor shortages are forcing contractors to raise wages and lure workers from other companies and even from other states, several recent construction industry surveys have revealed.

A series of misfortunes have kept the available workforce population far below levels needed to meet demand. One concerning result of the shortages is the pressure put on contractors to extend their timelines for the completion of projects, which in turn could lead to an economic slowdown.

Industry analysts see four factors that have led to the current situation:

  • Almost 2.3 million workers left the industry during the 2006-2011 construction recession.
  • Trade schools and trade associations haven’t been able to attract and graduate enough young people.
  • Older craftsmen continue to retire (the median age in 2013 was 42), or transition to other industries.
  • Immigrant workers, even those legally residing in the United States, are more reluctant to enter the workforce, or to relocate where contractors are offering higher wages.

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A 2016 Associated General Contractors survey of Texas contractors found 74 percent of companies struggled to hire craft positions.

 

To compensate for the lack of skilled labor, contractors have continued a reliance on ever newer innovations in technology, particularly the use of 3D modeling in pre-construction design work, and through use of prefabricated materials that shorten the on-site construction schedule by simplifying assembly and allowing the use of less skilled laborers.

While technology helps ease some labor issues, these shortages still affect the industry. And there seems to be no satisfactory solution in sight. Experts in the field are hoping that educational institutions will do a better job going forward.

J. Michael Shook, pre-construction executive at Turner Construction Co., said he sees a need for a greater focus on construction related trades at the high school level.

Michael Shook - Turner Construction

“High schools are training kids to go to college. But let’s face it, for some individual college isn’t their bag,” Shook said.

He pointed to a friend that bypassed college to become an electrician.

“He worked out a good career and now is retired,” Shook said. “He made a good living as a skilled tradesman. It’s a great career path. Some people just like to work outside.”

Unfortunately, it would seem more young people prefer to work indoors. Construction work often means laboring in the elements, without air-conditioning. Although, some construction jobs that lead to more time in a comfy office environment are offered through university programs.

“The (University of Texas at San Antonio) Construction Science and Management program provides much needed quality professionals for the construction industry,” said Bartlett Cocke General Contractors former president Harry Moeller.

Speaking through a UTSA Construction Industry Advisory Council press statement, of which he is a founding member, Moeller said, “We have observed the remarkable growth of this program in the last few years and will continue to support this effort.”

Training and apprenticeship programs, however, represent long-term solutions that do not match present demands. Moreover, education experts did not realize the need or begin to shift resources until about eight years ago.

It is difficult to find data that pins down the rate of progress being made to graduate students in sufficient numbers to fill the construction labor jobs gap. But we know that decades of prioritizing a college education doesn't fit with current realities. The National Education Association notes that while 70 percent of the U.S. labor force doesn't have a bachelor's degree, the vast majority of available jobs don't require one.

However, 51 percent of high school students don't go to college, and of those that do the majority do not complete a two-year associates within three years or a bachelor's within six years. Talk about an exercise in futility.

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Forty-one percent of respondents in Texas said they were losing craft workers to other construction companies, either in their area or outside their area. Another 27 percent were losing craft people to other industries. -- Source: AGC

 

Meanwhile, thousands of building trade jobs go wanting. The Associated General Contractors of America released the results of a survey last summer that show construction employment decreased or was stagnant in one-third (119 of 358) of the nation’s metropolitan areas from July 2015 to July 2016. AGC Chief Economist Ken Simonson said the report indicated “more contractors would add to their headcount, if they could find the workers they need.”

AGC CEO Stephen Sandherr said, “These shortages have the potential to undermine broader economic growth by forcing contractors to slow scheduled work or choose not to bid on projects, thereby inflating the cost of construction.”

Job openings have been at a 10-year high and construction employment rose in 239 metro areas. Skilled workers can be choosy, especially if they are willing to move. That AGC report found the largest increases by metro area in construction hires occurred in Denver (11,700 jobs); Phoenix (10,700 jobs); Orlando (10,400 jobs); Orange County, California (9,900 jobs); and Atlanta (7,800 jobs).

It has become commonplace for contractors to steal workers from each other. A carpenter may work for a residential contractor one month and switch companies to work for a commercial contractor the next.

AGC officials said the survey results underscore the importance of policy changes at the federal, state and local levels to improve the number and quality of workers entering construction. The AGC advocates reforming and increasing funding for the Carl D. Perkins Career and Technical Education Act (authorized in 2006, it provided $1.3 billion annually until 2016), easing the steps to create career academies that teach construction skills, and enacting comprehensive immigration reform.

Few, if any, of those steps are likely to occur in the present political climate. The Republican-controlled Congress is looking to make deep cuts in practically every federally-funded sector but the military, and the Trump White House is throwing up barriers to all types of immigration and expanding the parameters for enforcement of the undocumented.

The immigration situation bodes ill for the construction industry. The U.S. Census Bureau has calculated that of the 10.3 million workers in construction trades, almost 3 million are Hispanic. In sunbelt states, the percentage of Hispanic workers is higher.

In a ConstructionDIVE report last month, Chad Blocker, a partner at California-based Fragomen said, “There is a sense that some of the rhetoric coming out of Washington has created a general atmosphere of unease among foreign nationals in the U.S., and those working on visas would be among those who are impacted and facing an uncertain future as to whether they will be able to stay in the U.S.”

Blocker would like to see a temporary worker program that would free immigrant laborers from their fear or immigration raids.

“There are a lot of good paying construction jobs, and, yet, there aren’t enough U.S. workers,” he said. “It’s not about finding cheap labor. It’s about finding any labor at all.”

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Source: U.S. Bureau of Labor Statistics

 

In Texas, the government numbers indicate that one way Texas contractors have compensated for the skilled labor shortages has been to hire larger numbers of unskilled or semi-skilled workers. According to the Bureau of Labor Statistics, Texas consistently outranks other states in the number of construction helpers.

Texas ranks first in the number of employed construction laborers, carpenter helpers, electrician helpers, and plumber helpers. But when it comes to skilled craftsmen, Texas ranks fourth in hired carpenters, second in electricians, second in plumbers, second in cement masons and concrete finishers, third in HVAC technicians, and fourth for brickmasons and blockmasons.

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This disproportionate reliance on unskilled or semi-skilled labor, compared to other states, can be an indicator that Texas contractors are more reliant on technology as a coping mechanism than contractors in other states.

Prefabricated roof frames, wall panels and other ready-to-install modules have replaced entire portions of traditional build-on-site systems. There are other trends, as well.

Jerry Hoog - Bartlett Cocke General Contractors

“We have seen trends such as the use of insulated concrete forms (ICF), which we have used on multiple school projects, including for the reconstruction and replacement of those schools damaged in West Independent School District by the (West Fertilizer Company) fertilizer plant explosion in 2014,” said current Bartlett Cocke President and CEO Jerry Hoog.

Companies are capitalizing on the efficiencies realized with the use of Building Information Modeling (BIM 3D software), mobile tablets with industry specific applications, and drones.

Shook at Turner said, “We do a lot with Procore and BIM 360. That kind of software helps us to streamline cost-estimating of construction and materials. We’re always on the lookout for technology to help with estimates.”

The productivity and savings that result from new technologies are essential. But they are not the answer to everything. The labor shortages just keep getting worse and there is no turnaround in site.

Last month, the Texas Masonry Council (TMC) invited representatives from industry, government and education to discuss what to do about their labor shortage, according to a Houston Public Media report.

TMC President Ben Wheaton said, “We have just experienced over the last 30 something odd years a steady decline in, not just available labor, but skilled labor. We have increased our wages substantially over the last five years, and it’s just not enough to keep up with demand.”

He emphasized the need to impress upon high school age youngsters that the construction trades can be a competitive alternative to college.

“This is a viable trade, and a trade that can pay the bills and pay them well, too.”

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EOrtiz@journalist.com

 


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Jerry Hoog - Bartlett Cocke
Source: Bureau of Labor Statistics
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Source: Associated General Contractors
Source: Associated General Contractors
Source: Associated General Contractors
Source: Bureau of Labor Statistics
Mike Shook - Turner Construction

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Adolfo Pesquera
Reporter/Editor
adolfo@virtualbx.com

Adolfo Pesquera is a veteran news journalist. He has worked for Hearst Corp., American Lawyer Media, News Corp and Freedom Communications. His work has been published in newspapers and magazines across the USA. He is a journalism graduate of UT-RGV. He writes, edits and creates digital pages for VBX.