Worker Shortages Weighing on the Construction Industry
Labor deficits in construction are putting significant pressure on both building projects and the larger economy in general. After the real estate market collapsed in the wake of the financial downturn, construction workers left the industry in search of other work – but largely haven’t returned, even in the face of increased wages and activity. Commercial construction spending is up 9.7% in the first half of this year. Yet 86% of commercial construction companies are finding it difficult to fill positions.
The most significant risks for construction companies right now are:
- The costs to complete projects with fewer workers making more money
- The time to finish projects, impacting the ability to take on more projects
Builders are trying to mitigate these pressures by making conscious recruitment efforts and using labor saving technologies. In an example from this Wall Street Journal article, one company uses computer generated models to plan the placement of electrical systems, and then assembles them in a facility as far as possible before bringing it to a site. Labor shortages can lead to missed deadlines and project failures, and consultants recommend a careful approach to planning to avoid these pitfalls. According to this survey from KPMG, companies that engage in careful planning, prioritizing, and approval of projects have higher success rates. Financial incentives, such as referral bonuses, are being utilized to get employees to recruit additional workers are just some of the tactics companies use to attract help. The federal government is also trying to help. In 2014, the Helmets to Hardhats program began, with construction companies vowing to hire 100,000 military veterans over the next five years.
Some long terms solutions include the mentoring of young people and trying to re-engage the educational system in shop classes. Apprenticeships and craft training programs can help those individuals not headed to four year colleges, giving them the option of a career with good pay and benefits over their lifetime. Training existing employees and offering education programs to add or maintain skills can also increase both employee retention and the ease and success at which projects are completed.
CRG supports all of these strategies when working with our clients. We want to hear your experiences, so please share your thoughts with us!