Reshaping the Construction Industry

The following article originally appeared in the December newsletter to clients of Kiley Advisors, LLC.  Reprinted with permission.

Read any industry publication or newspaper article on the construction boom in Houston and throughout Texas and the phrase “craft worker shortage” will appear in the early paragraphs.  It is the number one strategic challenge facing contractors of all types.  The residential builders are faced with alternating crews between projects; the highway and road builders are working short.  Most commercial trade contractors would hire at least 10 more craft workers tomorrow, and the big industrial contractors, with mega-projects just about to start, estimate they are as much as 65% short, despite juicy per diems.  Schedules in all markets are strained; overtime is almost the standard everywhere.   Read more » about Let’s Salute Our Craft Workers

After more than thirty years in the construction industry, it’s time for me to step aside to make room for the next generation, and I must say I’m encouraged by what I see.

As I look back at my career in the industry, I’ve witnessed a lot of change.  In the 1980s, when I worked for one of the top engineering and construction firms in the nation, we didn’t have recruitment issues.  We had projects valued at more than $500 million with thousands of employees, and when we needed more pipefitters, welders or other craft professionals, we mailed notices to all those in our database who had ever worked for us.  We could expect that within days our employment offices would be full and our project workforce needs met.  During that time, employees went from contractor to contractor depending on where the work was.  The pay and benefits were good and the pool of employees seemed endless.   Read more » about Remembering the Past and Encouraged for the Future

Software Advice, a Gartner company, recently released the results of a study they conducted on the Impact of Job Roles on Construction Software Purchasing Decisions.  Software Advice surveyed over 800 owners, project managers and IT professionals about their software buying habits in the face of pressure from the construction market to get it done “faster, cheaper, and with fewer change orders and do-overs.”

The annual survey concludes that your reason for buying software depends on your position in the firm, especially in small and mid-sized construction firms.

According to the results of the survey, 36% of those owners were buying new software to increase accuracy in the systems that they deploy.   Read more » about Why Contractors Buy New Software

PPI falls in November as diesel price plunges; mixed moves foreseen for materials costs

Editor’s note: Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

The producer price index (PPI) for final demand decreased 0.4%, not seasonally adjusted (-0.2%, seasonally adjusted), in November and increased 1.4% over 12 months, BLS reported Friday. AGC posted an explanation and tables focusing on construction prices and costs. Final demand includes goods, services and five types of nonresidential buildings that BLS says make up 34% of total construction. There are no indexes yet for other building types, or for residential or nonbuilding construction. The PPI for final demand construction, not seasonally adjusted, rose 0.1% in November and 2.2% over 12 months. The overall PPI for new nonresidential building construction—a measure of the price contractors say they would charge to build a fixed set of five categories of buildings—also climbed 0.1% for the month and 2.2% since November 2013.    Read more » about AGC's Data DIGest: December 9-12, 2014

At this year’s annual fall conference hosted by Kiley Advisors, two strategic questions were explored, presented by two distinguished guest speakers.  The question “How long can this robust market last, and why?” was tackled by Adam W. Perdue, PhD in his presentation titled Is the Boom a Bubble?  Following that presentation and discussion, Brent Smith, PhD tackled the question “How can we do a better job of attracting, retaining, and developing talent as we compete with the expanding and better-paying energy and industrial companies?” in his presentation titled Managing Talent: Myths and Realities.   Read more » about Economist Explains Why Houston’s Boom is Not a Bubble

There’s almost nothing partisan or ideological about trying to stop companies from cheating taxpayers and their workers, which is exactly what happens when some firms misclassify their employees. As our readers know, worker misclassification happens when a company pretends its employees are subcontractors with the intent of avoiding payroll taxes and benefits like health insurance. Unions call it “payroll fraud.” Many of us just call it cheating, plain and simple.

The fact that this is a bipartisan issue became extra clear this past week following our report on new efforts in the Texas Legislature to try to rein in the practice, which has rightly been called “a scourge” and “a cancer” in the construction industry. It happens in other industries as well but it is especially rampant in construction.

Previous legislative attempts to deal with this in Texas have had mixed success. Now, a new bill has been filed in the Texas House.    Read more » about Conservatives and Liberals Alike Embrace Efforts to Crack Down on Worker Misclassification in Texas

Leadership Forum: “Not only did it help me professionally, but it helps me do better in life.”

Editor’s note: The Leadership Forum will be conducted January 8, 2015 – May 29, 2015 at the Associated Builders and Contractors of Greater Houston, 3910 Kirby Dr., Ste. 131, Houston, TX 77098

ABC’s Leadership Forum consists of 10 sessions over the span of 10 weeks. Attendees learn about team building, communication, negotiation and much more. Ray Beaudet, operations and senior project manager with Griesenbeck Architectural Products, Inc., was first to admit he thought himself to be a pro at these skills. And with a booming Houston market, he struggled to even think of separating from his desk. So when Beaudet’s boss signed him up for ABC’s Leadership Forum, he wasn’t exactly thrilled.    Read more » about ABC Leadership Forum Teaches Professional and Life Lessons

The reason contractors in the Houston area need comprehensive immigration reform immediately is straightforward: to have legal access to immigrant workers so that they can help build all the projects that are planned or are already under construction in this market, which is coming on like gangbusters.  The market is projected to keep booming for at least the next three to five years.

There is no doubt in my mind that the greater Houston area is in the midst of an unprecedented building boom.  In my 31 years of closely monitoring this construction marketplace, I have never seen the conditions that exist now.  And it’s projected to continue going forward.  All major market sectors – residential, heavy industrial, highway and civil, and commercial – are on fire and so is every segment within those sectors.

In residential, both single-family and multi-family units are being built at record levels.  In heavy industrial, it is both power and chemical plants – driven by natural gas as both a power and feedstock source – that are being built here in Texas and next door in Louisiana.  In highway and civil construction, the Texas Department of Transportation as well as cities and counties all have projects underway, and more projects are on the drawing board.  And in commercial, it is the medical segment, the K-12 school segment, the colleges and universities segment, the warehouse segment, and general purpose office space segments that continue to all see building at near record levels.   Read more » about The Texas Construction Industry Needs Comprehensive Immigration Reform

I had the pleasure of shooting the breeze with Chamberlin Roofing and Waterproofing President and CEO, John Kafka the other day.  As he recalled days gone by, he shared with me what he thinks has been a powerful caveat for the collective success of the company – a refusal to give up.  Even in the most difficult times, he shared, he never wondered IF Chamberlin would succeed, though he perhaps wondered HOW at some particularly low points over the past 36 years.

Since “success is not a destination but a journey,” we at Chamberlin continually strive as an organization and as individuals to grow.  We keep in motion, always taking the next step forward as challenges confront us.  Throwing our hands up in the air and giving up is never even a consideration.

To that end, I am proud to announce that a handful of key Chamberlin folks have recently taken the next step in their professional journey, having been promoted to Vice President.   Read more » about The Secret of Success

Construction employment hits 5½ year high in November; spending climbs in October

Editor’s note:  Construction Citizen is proud to partner with AGC America to bring you AGC Chief Economist Ken Simonson's Data DIGest. Check back each week to get Ken's expert analysis of what's happening in our industry.

Nonfarm payroll employment increased by 321,000 in December, seasonally adjusted, and by 2,734,000 (2.0%) over 12 months, the Bureau of Labor Statistics (BLS) reported on Friday. Construction employment rose by 20,000 for the month and 213,000 (3.6%) over the year to 6,109,000, the highest total since April 2009. Residential construction employment (residential building and specialty trade contractors) climbed by 16,700 for the month and 122,800 (5.6%) for the year. Nonresidential employment (building, specialty trades, and heavy and civil engineering construction) increased by 3,600 in November and 90,100 (2.4%) year-over-year. Average hourly earnings for all employees in construction rose 2.7% from November 2013 to November 2014, the largest year-over-year increase since September 2009 and double the 1.3% increase recorded a year earlier. The number of jobseekers who last worked in construction hit an eight-year low of 629,000 and their unemployment rate fell to the lowest November level in seven years:   Read more » about AGC's Data DIGest: November 25 - December 8, 2014

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