Contractors should expect more opportunities for work in 2014.
They also should expect to struggle getting that work done.
Edward Zarenski, estimating executive for Providence, Rhode Island-based Gilbane Building Co., said as bidding opportunities increase, construction companies that take on more work will be less productive because they will be forced to rely on inexperienced workers.
According to a report Zarenski published in December, construction employment nationwide is “far worse than the unemployment figures would lead you to believe.”
“Currently,” according to the report, “we are just barely above a 15-year low.”
Construction employment nationwide peaked in April 2006, according to data from the Bureau of Labor Statistics, when the industry employed 7,726,000 workers. By November 2013, 5,851,000 of those workers remained.
“You lost a tremendous number of experienced people,” Zarenski said.
The problem, he said, is that construction is picking up.
Construction starts were up 10 percent year-over-year in 2012 and 6 percent in 2013, according to McGraw Hill Construction, and are expected to increase another 9 percent in 2014. In 2011 and 2012, by comparison, starts grew by 2 percent.
Contractors will need to increase hiring to meet demand, according to Zarenski’s report, and they should expect to struggle to find qualified workers for the next five years. That will drive costs up and quality down.
According to the report, productivity will drop because longtime employees will be “working longer hours until new workers are brought on,” and companies will be hiring people who lack experience and “acclimating new workers to the crew.”
In with the new
Zach Comstock is one of those new workers.
The 24-year-old from Endeavor is in his third year of an apprenticeship with the International Union of Operating Engineers. Construction was not his first choice, he said, but he came around after working in a factory after graduating from high school.
He said he understands the industry’s wariness about hiring a wave of young workers. The older guys, those who stuck around during the economic downturn, he said, know how to do everything fast and right. But they won’t be around forever.
“You have to train the new people,” Comstock said, “who are, one day, going to take over.”
But Comstock and others his age could have trouble persuading contractors to give them a chance.
Randy Decker, the owner of Athens-based Decker Lumber and Supply Inc., which is a general contractor, said he does not have immediate plans to expand his eight-man crew, but he probably will in a couple years.
Prospects, he said, are slim.
“I try to hire some part-time in the summertime,” Decker said. “Forget it. Parents ain’t teaching their kids anything, except video games.”
Construction employment in Nov. 2013: 5,851,000. Compared to April 2006 (previous peak): 7,726,000. (Bureau of Labor Statistics)
9 percent: expected year-over-year increase in construction starts in 2014 (McGraw Hill Construction)
14 percent: percentage of construction workers who were union members in 2013 (Ken Simonson, chief economist for the Associated General Contractors of America)
$730 million: estimated investment if 3 proposed downtown projects (833 East, The Couture and Northwestern tower) break ground (Ken Kraemer, executive director of Building Advantage)
15: number of field workers Faith Technologies wants to hire in Wisconsin this year
5: number of years Edward Zarenski, estimating executive for Gilbane, expects a qualified-worker shortage to last
— Beth Kevit
Bob Ford, president of Waukesha-based Ford Construction Co. Inc., is planning to hire in spring. In 2011, he had a dozen workers, but the downturn whittled that down to five.
He has not been impressed, he said, with the applicants.
“The ones we are getting are rather unqualified,” Ford said, “rather inexperienced.”
Inexperienced workers need on-site training, he said, which saps the attention of veteran employees. Green workers also can make sites more dangerous.
“You bring people on the site that are not experienced,” he said, “they don’t know one sound from another.”
Recognizing specific sounds in the din of construction, Ford said, is often the first step toward preventing worksite injuries.
But, he said, his biggest concern is not a dip in productivity but rather a dip in quality. It is acceptable if jobs take longer to finish, he said, but he does not want to go back and rip down work.
Ford said apprentices often are better choices than hiring people off the street. Apprentices can prove they have learned some skills, he said, but it is a long wait for them to become journeymen and to be able to work without returning to the classroom.
“I’m not interested in going to an apprenticeship program at this point,” Ford said, “because I don’t think the economy is healthy enough for it.”
But union labor is becoming a bigger part of the construction workforce.
Ken Simonson, chief economist for the Associated General Contractors of America, said 14 percent of construction workers in 2013 were unionized, up from 13.2 percent in 2012. That growth is counter-intuitive, he said, because, normally, when the industry grows, the percentage of union workers shrinks, and most of the growth is in residential construction, which typically is less unionized than other sectors.
He said he cannot predict whether that will continue, but the numbers suggest unions could be a growing source of labor for contractors.
Ken Kraemer, executive director of Building Advantage, a Milwaukee-based organization that promotes the hiring of union workers, said enrollment is increasing in local apprenticeship programs. During the economic downturn, he said, classes of one or two people were common, but now there are as many as 20 students in attendance.
Most contractors kept their A-teams during the downturn, Kraemer said, and a lot of workers who left either found other positions or are waiting until the rebound proves sustainable.
“We’re getting to the teetering point,” he said.
In Milwaukee, Kraemer said, three big projects proposed for downtown are prompting concerns about a worker shortage: Northwestern Mutual Life Insurance Co.’s office tower at East Mason and North Cass streets, Irgens Partners LLC’s 833 East on Michigan Street and Rick Barrett’s The Couture right next door. Combined, those projects represent a proposed $730 million investment, he said, and if all three break ground, he estimated, they would create about 7,300 construction jobs.
“That’s a pretty demanding thing,” he said.
The firms that do not use union labor need to rely on other ways to find workers.
Stephanie Guin, executive vice president of human resources for Menasha-based Faith Technologies Inc., said her company has offices in 15 markets and has 864 fieldworkers in Wisconsin. There are 15 openings in Wisconsin, but the company has plans nationally to hire 146 fieldworkers, 50 interns and at least 50 engineers.
Faith Technologies, Guin said, had to get creative in its search. The contractor relies on the Associated Builders and Contractors’ training program for Wisconsin workers, but also made a recruitment video, she said, that is sent to high schools and is posted on YouTube (see video below).
The company also is testing a scholarship program, she said, and has a weeklong boot camp called Quick Start, which helps new employees learn, for example, pipe bending before they start nonunion apprenticeship programs.
Guin agreed there is a learning curve with new employees but said Faith Technologies is not anticipating difficulty finding enough workers.
“I think,” she said, “we’re doing something right.”
Simonson said he is not convinced an inexperienced labor force could stifle a rebound in construction. Green workers can be given the less difficult tasks, he said, freeing up experienced workers for the more intricate parts of projects.
But, Simonson said, if a contractor does not have at least some experienced workers, stumbles will be unavoidable.
“It’s almost inevitable” in that circumstance, he said, “that there will be some loss of productivity initially.” Follow @bkevit