MNI ANALYSIS:Construction Firms Struggle To Find Craft Workers

--Faster Hiring Pace In Construction Than Overall Economy

--Baby Boomers Retiring Exacerbating Worker Shortage

By Vicki Schmelzer

     NEW YORK (MNI)   - The construction industry's struggle to find craft

workers has become widespread and is not going away anytime soon, according to

the findings of a survey released this week by Autodesk and the Associated

General Contractors of America. 

     The national survey of 1,608 companies in the industry found that 70% were

having difficulty filling hourly craft positions. 

     "In the short-term, fewer firms will be able to bid on construction

projects if they are concerned they will not have enough workers to meet

demand," said Stephen Sandherr, chief executive officer for the Associated

General Contractors.

     "Over the long-term, either construction firms will find a way to do more

with fewer workers or public officials will take steps to encourage more people

to pursue careers in construction," he said. 

     The survey respondents were involved in various construction projects:

private offices, public buildings, retail, warehouse, lodging, hospital, schools

and colleges, Federal, manufacturing, highway, multifamily dwellings, water and

sewer and "other transportation."

     Thirty-five percent of those polled had difficulty filling some "salaried

office positions," 38% "some salaried field positions" and 16% "some hourly

office positions," while a whopping 70% had a hard time filling "some hourly

craft positions."

     Of the top five craft positions, 58% of those surveyed had difficulty

finding carpenters, 53% finding bricklayers, 53% electricians, 51% concrete

workers, and 50% plumbers. 

     Other scarce workers included cement masons, laborers, equipment operators,

pipelayers and drywall installers.   

     A net 43% of those surveyed said it will continue to be "hard to hire"

hourly craft in the coming 12 months.

     The survey found that 38% of respondents said they were losing hourly craft

workers to other construction firms in their area and 12% were losing workers to

firms outside their area and 20% to other industries in their area. 

     As a result, 50% of those polled said they had increased base pay rates,

24% said their firm provided incentives or bonuses, and 20% increased the

portion of benefit contribution and or improved employee benefits. 

     And 10% of those surveyed said they were considering wage increases and or

benefit improvements in "the near future."

     To address the worker shortage, 47% of companies surveyed have used

overtime hours, 46% in-house training, 41% subcontractors, 35% interns and 27%

career building programs at high schools, colleges and career/technical

institutions. 

     Additional problems for the industry to overcome are the lack of bilingual

Spanish instructors/managers, prohibitively high housing costs for workers and a

lack of transportation. 

     MNI participated in the survey conference call and asked the panel for

background about shortage of craft workers. 

     "This has been a long time coming," said Ken Simonson, chief economist, at

the AGC. 

     "In some ways, you could trace it back 20 years or more to the push among

parents and high school teachers and guidance counselors to send everybody to

college and kind of shun construction or other hands-on work," he said. 

     The U.S. financial crisis, with negative spillover effects on the housing

industry, also prompted some in the industry to look for more recession-proof

careers, he said. 

     But, there were already warning signs in the construction industry well

before the crisis began, Simonson said. 

     "Construction had the longest and deepest downturn in employment of any

industry - it began in 2006, well over a year before the general slump in

employment and it didn't end until January 2011," he said.

     This five-year downturn "cost 2.3 million employees their jobs in

construction," Simonson said, "That was a huge hole to dig out of." 

     Some working in construction retired or went on to other careers and given

the lack of "help wanted" signs in the industry, "people who might have chosen

construction as a career went elsewhere," he said.

     Since January 2011, the industry has been hiring workers "at a stronger

rate than the overall economy," Simonson said.

     In the past 12 months, construction has added workers at a 3% pace versus

about 1.5% for the overall economy, he said.  

     Nevertheless, "construction employment is still 11% below the all-time

peak, whereas the economy as a whole is setting records and now unemployment is

down to a 16-year low of 4.3%," Simonson said.  

     In terms of remuneration, "construction pays about 9-10% more than the

economy wide average, he said.

     Of potential interest to recent college graduates with no particular game

plan, "Someone starting off in construction can make a whole lot more than

working in retail or hospitality jobs," Simonson said.  

     Looking ahead, the skilled-trade problem will not be easily solved.

     "The biggest source of our labor shortage is the baby boomers retiring,"

said Aaron Benike President of Benike Inc, a construction company in Rochester

MN in Q&A. 

     "We see this in our area and specifically in our company; it's going to get

worse before it gets better," he said.

     AGC's Simonson noted that "historically - for decades, the U.S. labor force

grew about 1% per year, but for the next decade or longer, we're going to have

nearly as many baby boomers retiring as you'll have American-born entrants into

the workforce."

     "And so, continued growth of the workforce whether it's for construction or

any other sector is going to depend on having an adequate supply of immigrants

or attracting a higher percentage of people who are now staying out of the

workforce back into it," he said. 

--MNI New York Bureau; tel: +1 212-669-6438; email: vicki.schmelzer@marketnews.com

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