Construction Industry Flourishing, But Workforce Woes Cause Concern
Hiring managers have their fingers directly on the pulse of the U.S. economy, and they’re feeling a steady heartbeat of demand, particularly in the cyclically sensitive construction industry. Within the last 60 days across the U.S., advertised management roles in construction have grown by almost 27 percent, with 62 percent growth across all construction and extraction occupations. Population growth, deteriorating infrastructure, and aging buildings are driving demand for executives who can stay in front of current and future trends.
Residential construction is expected to grow moderately over the next decade to meet the needs of a growing population as Baby boomers’ eldest children reach their peak house-buying years. Demand by an expanding older population for senior housing and healthcare residences will also lead to additional growth.
Replacement of many industrial plants has been delayed for years, and a large number of structures have to be rebuilt or remodeled. All types of medical treatment facilities geared to the growing elderly population are needed, as are schools, especially in the South and West, where the population is growing the fastest.
Heavy and civil engineering construction is also increasing, due to growth in new highway, bridge, and street construction, as well as in maintenance and repairs to prevent further deterioration of the nation’s existing highways and bridges. Voters and legislators in most states and localities continue to approve spending on road construction, which will create more jobs over the next decade. Another area of expected growth is in energy construction. Even with increased conservation and more efficient appliances, there is an ever-growing demand for power, which means a corresponding increase in jobs for new power plant construction and for connecting these new facilities to the current power grids.
Geographic hot spots. The surge in new builds is especially high in the key markets of Illinois, Minnesota, Texas and Iowa. For example, although Illinois ended 2015 with fewer jobs than the beginning of the year, construction was one of the bright spots on the employment landscape, with nearly 7,000 new jobs added. Much of this growth is fueled by companies renovating space, which is keeping the home improvement business busy. The luxury market in particular is offering the most opportunity for remodelers.
In Minnesota, construction employment has shown the fastest growth of any major industrial sector, with many large projects planned or underway that promise to bolster the need for construction employment. The Minnesota Legislature recently approved a $1 billion public works package that will pump funding into state college and university building projects, parks and trails, prisons, hospitals, roads, bridges, and dozens of economic development projects sought by cities and counties throughout the state.
In Texas, infrastructure and industrial construction projects are expected to absorb much – although not all – of the slack associated with cutbacks in shale oil production. In South Texas alone more than 100 large-scaled capital development projects are currently underway, a record number that promises to create more than 2,000 high-paying permanent jobs.
Iowa has a low unemployment rate of 3.8 percent, and the construction industry continues to have difficulty finding skilled managers and workers to handle the number of projects related to the energy industry. In early 2015, in fact, a shortage of skilled construction workers delayed an Iowa DuPont biofuel plant project, and the continuing difficulty in finding labor is driving up construction costs and postponing project completion.
Finding solutions to the talent crisis.
Although the outlook is optimistic, the construction industry faces a number of significant challenges. Companies continue to be squeezed by rising healthcare costs, and are concerned about the impact of a host of new federal regulatory measures on their operations. Foremost among those challenges is the growing shortage of qualified professionals to fill available positions.
A significant portion of employees who left the industry during the recession never returned, and companies are still struggling to find workers at all levels to properly staff their teams. The problem is so acute in some areas that companies have had to delay or completely turn down a project due to their inability to find qualified people to manage the project.
Not only has the construction industry struggled to appeal to a younger, more technologically savvy workforce, but during the economic downturn, many companies opted not to bring in younger, newer talent. Now that tactic is causing difficulty in filling gaps in the workforce, a situation worsened by the need to replace retiring Baby boomers.
Strategies to cope with the situation include:
- Looking beyond the field. Companies became accustomed to finding candidates in their own backyards during the recession – no relocation costs, no recruiter fees. They now have to accept that those days are over and a new reality is in place. Competition for skilled professionals is intense, and they will likely have to employ recruitment professionals specializing in the industry to source passive candidates and lure them away from the competition.
- Enlarging the candidate pool. Companies must also foster a more open approach to new tactics to find the best talent. Instead of looking for the “perfect” candidate on paper, they have to consider not only skills, but also factors such as cultural fit, ambition and management style. The offer itself is often a secondary concern when both parties recognize a good, long-term fit.
- Improving the recruitment process. Often companies lose a top candidate to a competitor because their hiring process takes too long. In the current market, when a company hesitates to hire, candidates simply pursue other options. They are no longer fearful about the job market, knowing there are better opportunities out there.
- Ensuring that the offer is competitive. Similarly, candidates are not going to accept substandard offers. As the supply of qualified workers tightens, compensation levels and benefits packages are improving in order to attract and retain construction professionals. Yet even with these pay and benefits increases, many firms find they are still losing workers to other construction firms and other industries, further exacerbating the problem.
Embracing New Technology. The industry is also facing the urgent need to direct more attention to the role of technology. The use of Building Information Modeling (BIM) technology is becoming increasingly prevalent, and it is no longer relegated to just the largest firms. BIM offers tangible business benefits, no matter the level of implementation; it provides more consistent, more accurate and less time-consuming project document generation. In addition, BIM users can expect better collaboration and coordination among the different parties involved in a project.
But implementing technologies such as BIM also adds to the difficulty of getting the right professionals in place. Many smaller, family-owned firms have grown their teams by promoting from within. When new technology and analytics are introduced to the market, these firms often do not have people internally with that experience. They look for senior people from outside with experience in technology, but typically these professionals find themselves with the dual roles of both producer and trainer. Larger companies are often early adopters of newer initiatives and invest in training departments to roll it out to the teams, but despite their willingness to hire, the pool of candidates who are experienced in new technology is still small.
There is little doubt that the construction industry will continue to flourish in 2016 and beyond. Companies are investing in new technologies and equipment, pursuing new market opportunities, and embracing more efficient ways of doing business. After several years of cautious expansion, they have the confidence to bring on new employees – if they can find them.
Jim Lappin serves as Practice Director of the Midwest Construction Recruiting Team
Indianapolis General Contractor Construction Recruiting
Chicago General Contractor Construction Recruiting