The Elephant in the Room: The Workforce

AGC 2013 is celebrating 90 years in Houston. With that in mind, I sat down with AGC Houston President Jerry Nevlud recently at his office to talk about the road ahead for the construction industry in Southeast Texas. Nevlud, who's also a Construction Citizen blogger, told me things look good but the "elephant in the room" is the workforce and whether the industry will embrace private sector solutions for addressing it or wait for the government to take the lead.

BRADDOCK: Jerry, given the economic conditions and everything else happening in this market, what's the outlook for the year ahead?

NEVLUD: The outlook is great. I think that we're all very bullish on the Houston market for the next several years. I guess the, obviously with where the Eagle Ford Shale and what's going on and what the oil and gas companies are doing and so that creates a great base for construction and we've had several big bonds pass, so from that standpoint we're very bullish on the opportunities for our members. Obviously, the 800-pound elephant in the room is the workforce. We're already seeing a little signs of shortages of the craft worker and we're not, from all indicators, anywhere near where we'll really going to be in the crunch and the amount of work and so we've got some work to do on getting a workforce to do the work.

BRADDOCK: Yeah, and one of the things you mentioned there, the Eagle Ford Shale, of course, is a lot of the oil and gas companies taking away a lot of those workers, right. But they're going to be needed for some of these projects as we're starting to ramp up. I mean, what's the plan, Stan? How do we fix this? How do we get people more interested in doing this kind of work?

NEVLUD: That's going to take an effort on a lot of people's parts, and we here at AGC and subsequently several other associations in our market, we've been working on an owner-driven, an owner-demand concept called the Construction Career Collaborative which we believe is the way that we really need to go, which basically has owners demanding. It’s their jobs, jobs becoming more and more technical, more and more, I say difficult. It's still construction, but the techniques and the methods and the requirements get more and more stringent as you forward, and you need a workforce that can handle that type of work. And unfortunately over the past, you can go back 25 years, skilled training has just diminished to a point now that it's a few select companies do it, there's some organizations that provide it but if owners don't demand it, there's really no incentive for companies to invest in training, and so without that lack of incentive, which is going further and further with a workforce that's unskilled and the image suffers. Kids today, they're looking for opportunities that they feel good about and so we've got to do something about it and we think C3 is the way to do it.

BRADDOCK: I know there are some projects underway. Are owners starting to, especially the ones that are involved, getting the message that this is the right way to go and they understand why? They get the reason.

NEVLUD: Yeah, we're very fortunate in Houston to have the Texas Medical Center. And there are some elite owners there, obviously they have some pretty, I'll say difficult but some pretty intense projects as far as what a hospital construction requires. They're repeat builders, so they understand it's in their best interest that they continue to have a workforce that can do that type of work. They understand the concept of a sustainable workforce, that we need to continue to grow and build that workforce and not just continue down the road we are, because we do lose— when you get good workers, they may look at the oil and gas industry, or we got the petro— we're very fortunate to have the petrochemical industry here because of the jobs they provide but they also need construction workers as well so MD Anderson and Texas Children are two organizations that have been very, very supportive and have been very helpful in helping us to develop, and kind of run the best practices of what a C3 program really needs to look like.

BRADDOCK: If the 800-pound gorilla is the workforce issue, isn't the monkey that could potentially be on people's back the government? I mean, you have the state government moving toward cracking down on misclassification of workers that came within this close, I'm holding my fingers about an eighth of an inch apart, this close to doing something on that in this session and could do that next session. There are also cities around the state looking at adopting what are some of these C3 principles. Houston, and some smaller cities, and mid-sized cities as well, but I think it's probably important to underscore that this C3 initiative is a private-sector solution, and any company that'd be on board would be that much ahead of the game.

NEVLUD: Absolutely, when this concept or this initiative took place three years ago, it was about being a voluntary initiative, but the fact of the matter is, the individuals who sat down initially said, "This is our industry. Let's fix it. We don't need government doing that for us. Government would be happy to do it, but this gives us an opportunity as an industry to do— because we know the business, we can contract generals and specialties and owners who understand that, and because it is our industry, we can fix this."

BRADDOCK: Alright. Jerry Nevlud, thanks for having us at AGC Houston.

NEVLUD: Thank you very much.