The Perfect Storm for Construction Skilled Trades
The construction industry is facing a perfect storm of issues, which will result in severe skilled workforce shortages in the near future. The Construction Labor Market Analyzer® (CLMA) provides the reliable data that Owners and contractors need to plan their future projects to avoid higher labor costs and missed schedules because of skilled trade shortages. The CLMA® also provides regional trend information by craft to focus new recruiting and training programs to the critical needs of the industry.
When the construction volume peaked in 2006 to 2008, there were more projects than there were skilled trades to work on them. Competition for skills increased wages and incentives, which resulted in busted budgets, missed schedules and sometimes, cancelled projects. Contractors were using extended overtime, per diems, completion bonuses and other innovative approaches to staff their projects. Owners were experiencing higher costs and delayed startups, and were even cancelling projects because of high labor cost estimates.
The Current Situation
Currently, skill trade availability is not perceived as a pressing issue for the construction industry. The benches are relatively full and projects are easily staffed. The current surplus has caused many in the industry to move away from workforce development. With high unemployment, there is less incentive to develop our future workforce. But, as the construction industry rebounds in the future, Owners and contractors will find that the pool of skilled trades has been significantly reduced. The workers that we all counted on will no longer be available.
There is a perfect storm of conditions, all of which are reducing the skilled workforce pool for the construction industry. The following are all current issues that will affect how we staff future projects.
One: High Unemployment During the Recession
Recent reports of lower unemployment are because more people are leaving the industry in search of work in other areas.
“The fact that the construction industry unemployment rate in August declined to 11.3 percent – the lowest level since October 2008 – seemed to be a pleasant surprise,” said Associated Builders and Contractors Chief Economist Anirban Basu. “But under further examination, this is largely due to former construction workers moving to other industries or leaving the workforce all together.”
For example, some construction workers are moving into the expanded oil and gas fracking industry, which is booming with consistent high employment and a bright future for further expansion.
Two: Limited Jobs to Recruit New Workers
It is difficult, if not impossible, to recruit new workers to the construction industry when there are not any jobs for them to earn an income during the training. Few companies are recruiting when they are currently focused on maintaining their core workforce and surviving the downturn.
Three: Connecting With the Millennial Generation
The current trend in schools and government is to strongly encourage college education. There is little or no focus on developing skilled trades for the industry. Vocational and adult education now focus on jobs in health, finance, IT, public works, etc. Manufacturing and the construction industry do not have a pool of potential young workers to fill future skilled trade positions.
Four: Minorities and Women Have not Joined the Construction Industry
In the past, there were forecasts that the construction industries workforce would be more diverse with minority and women participation increasing. For many reasons, except for Hispanics, this has not happened significantly.
Five: Baby Boomers are Retiring
The construction industry will see a significant reduction in skilled, experienced workers as more baby boomers reach retirement age over the next 5 to 10 years.
What Can be Done?
With all of these trends, the construction industry of the future will be different from the past. We can no longer count on having the right skilled trades to staff our projects. These changes will require significant better planning and management of our projects, including:
- Planning projects based on skilled workforce availability: Using tools like the Construction Labor Market Analyzer® (CLMA) to identify trends in skilled workforce supply and demand will be essential to planning future successful projects. Without this planning, projects will experience unexpected higher costs or delayed schedules as contractors are not able to staff projects.
- New innovative approaches to building projects with less labor. Using new materials, vendor supplied assemblies, off-site prefabrication and modularization will all be required to complete projects with less labor available on-site.
- New commitment to recruiting and training: Owners and contractors will need to collaborate and identify new innovative approaches that will result in bringing more skilled workers to the industry. In this area, the CLMA® can provide reliable data on the potential skilled craft shortages so recruiting can be focused and effective on the most critical trades.