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AGC's Data DIGest: October 21-24, 2014

Contractors report trouble finding workers, expect worse ahead as employment picks up

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.

Contractors report increasing difficulty finding qualified workers.  AGC reported last Wednesday that 83% of the 1,086 respondents to a survey it conducted in late August and September said their firms were having a hard time filling craft worker positions and 61% said the same about key professional positions. (In a survey AGC released in January, 53% reported difficulty filling craft positions and 45% reported difficulty filling professional positions.) Of 12 crafts included in the survey, the most-cited position was carpenters, with 66% of firms that employ carpenters saying they are hard to find. Other hard-to-fill crafts included roofers (listed by 64% of firms that employ them); equipment operators (59%); plumbers (54%); electricians (52%); iron workers, laborers and pipefitters/welders (49% each); and cement masons (48%). Less often cited were painters (37%); drywall installers (36%) and bricklayers (32%). The most-cited professional position was project managers/supervisors (48%), followed by estimating professionals (32%), engineers (27%), safety professionals (11%), business development/marketing (10%), IT staff/building information modeling (BIM) managers and tax/accounting/finance professionals (5% each) and HR/training professionals (4%). Nearly half (48%) of respondents said they had increased use of subcontractors in the past year and 37% had turned to staffing companies. Only 13% had increased use of lean construction and 7% used BIM more. Respondents expect it will continue to be hard or get harder to find and hire craft workers (82% of respondents) and qualified construction professionals (70%). A majority (55%) rated the pipeline for training new craft workers average or poor but 59% rated the overall quality of local training for preparing new construction professionals as average, above average or excellent. A majority have increased base pay rates to retain and/or recruit craft workers (59%) and professionals (56%), with about one-quarter of firms also providing incentives/bonuses and increasing contributions and/or improving employee benefits.

Current and expected worker shortages vary by region. Industrial Info Resources reported last Thursday that it “forecasts that regional labor demand in 13 skilled crafts, including welders, pipefitters, ironworkers and others, will increase 76% from 2012 through 2016, rising from 104.5 million hours to 184 million hours across all Gulf Coast zones…between Brownsville, Texas, and Pascagoula, Mississippi.” The firm reported that at the beginning of the third quarter of 2014 it “was tracking 1,039 capital projects worth more than $245 billion that had begun construction or were planned to begin construction between 2013 and 2018 in the Texas, Louisiana and Mississippi Gulf Coast region. This is an increase of more than 40 projects and $11.98 billion in total investment value from the second quarter….A substantial amount of this growth in planned project spending occurred in the Greater Houston area, which added $4.22 billion in planned projects during the quarter, as well as in Greater New Orleans, which added $3.2 billion. Planned spending in the Gulf Coast region's most active metropolitan region, Lake Charles, remained relatively flat between quarters, at $70.1 billion in planned spending.”

Seasonally adjusted construction employment increased in 39 states from September 2013 to September 2014, decreased in 10 states, and remained flat in New Mexico and the District of Columbia, an AGC analysis of Bureau of Labor Statistics (BLS) data released last Tuesday showed. Florida again added the most jobs (41,900 jobs, 11%), followed by California (38,300, 6.0%) and Texas (31,800, 5.2%). The largest percentage gains were in Nevada (13%, 7,300 jobs), Delaware (13%, 2,500), Florida, Utah (11%, 7,900) and North Dakota (10%, 3,400). The largest percentage and total losses occurred in New Jersey (-8.0%, -11,200 jobs), Arizona (-6.2%, -7,600 jobs) and West Virginia (-5.9%, -2,000 jobs). For the month, 34 states and D.C. added construction jobs, 15 states lost jobs, and Wyoming had no change. (BLS combines mining and logging with construction in D.C., Delaware and five other states to avoid disclosing data for industries with few firms.)

New construction starts in September advanced 10%” at a seasonally adjusted annual rate from the August level, McGraw Hill Construction (MHC) reported on October 20. “The increase followed an up-and-down pattern during the previous two months, and brought activity to its highest level so far during 2014. Nonresidential building registered a sharp gain [15%], helped by an elevated pace for several institutional categories plus another brisk month for manufacturing plants, while the nonbuilding construction sector (public works and electric utilities) also strengthened” by 38%, but residential building starts dropped 9%. MHC Chief Economist Robert Murray commented, “While the progress for construction starts has been uneven at times on a month-to-month basis, the quarterly averages show that an upward trend has been re-established. In this year’s first quarter, construction starts fell back 10%, but then climbed 6% in the second quarter and another 6% in the third quarter. A key factor in keeping the construction expansion going in 2014 has been the greater role now being played by nonresidential building. Commercial building has continued to see moderate growth from low levels, and the manufacturing building category is still showing a surge of chemical and energy-related plants reach groundbreaking. What’s different in 2014 is that the institutional structure types are now beginning to contribute to the nonresidential building upturn. In contrast, both public works and electric utilities have generally lost momentum during 2014, notwithstanding their strong showing in September. And residential building is now providing a much smaller lift than in the past two years, as the sluggish performance by single-family housing has outweighed further gains by multifamily housing.”

The Data DIGest is a weekly summary of economic news; items most relevant to construction are in italics. All rights reserved. Sign up at www.agc.org/datadigest.


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