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Labor Shortages Creating Higher Construction Costs Today

Peter Caulfield, a correspondent for the Journal of Commerce: Western Canada’s Construction Newspaper, wrote last week that owners of newly designed buildings are looking at innovative ways to get their buildings constructed as a result of a shortage of skilled labor in the industry.

Caulfield was reporting on a recent Building Owners and Managers Association of Manitoba (BOMA) luncheon where Michael Grimes, the director of business development for FWS Commercial Projects, Ltd. was a guest speaker.  Grimes lamented the high construction costs which he said is the result of a lack of skilled trades people.  According to the article, the cost of building an industrial warehouse in Winnipeg is $90 per square foot while the cost to build the same building in North Carolina is $35 per square foot.  Grimes asserted that this higher cost is due to the lack of available trades people at the sub-contractor level.  He stated:

“Due to all of the construction activity in Winnipeg, the demand for trades people has been exceeding supply for the last five years or so. ... You don’t save money by beating up on your sub-trades.  You save money by thinking outside the box.”

Grimes shared a few “out of the box” ideas including the use of more pre-fabricated wall systems, pre-cast structural systems and bringing the contractors and subs into the design process at an earlier stage.

Doug Corbett, principal with Smith Carter Architects and Engineers stated in his portion of the program that there is a shortage of mechanical and electrical skilled workers in the Winnipeg area.  The construction market in that part of Canada has remained strong during the recession in the United States.

Now that the economy and the construction industry are beginning to recover, it is possible that we will see these shortages materialize at a faster rate than projected.
No where will this be more likely to happen than in Texas where the oil companies are once again expanding as a response to the Eagle Ford play in South Texas.  Already there are major projects underway in Houston and San Antonio that will need a major portion of the available skilled trades in order to meet the demand that is being created.

As we have said before, now is the time to recruit new people into the companies that will be called upon to build the new offices and industrial facilities of the next ten years.  Scott Braddock, one of our bloggers, recently penned an entry on the need for the Texas school systems to create a vocational track that will provide the talent for the industry of the future.

Read the entire Journal of Commerce article and let us know what you think.

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