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Possible Construction Consequences

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Vigorous residential and commercial construction activity can currently be seen up and down the Route 1 Corridor, at Odenton Town Center, in downtown Columbia, in Savage and in Maple Lawn. Other major projects are set to begin shortly, among them the renovation of Long Reach Village Center, and the initiation of activity at Laurel Park Station and Konterra Town Center East.

It’s a good time to be a developer or a subcontractor, particularly after the long, dry period of The Great Recession. But ask around, and they’ll all confess to sharing the same problem: a skilled labor shortage that’s making it difficult to plan jobs, maintain pricing and finish projects on time.
It’s not a localized problem, and it’s also not something that happened overnight.

The Associated General Contractors of America’s (AGC) 2017 Workforce Survey, released in August, indicates that 70% of respondents nationwide are having problems filling some hourly craft positions. In fact, 50% or more of these respondents reported difficulty finding plumbers, concrete workers, electricians, bricklayers and carpenters.

Only 14% rated the adequacy of the pipeline for supplying well-trained craft personnel as “good,” while the largest contingents — 36% and 38%, respectively — rated it “fair” or “poor.”

AGC’s analysis of the survey results suggests “significant short-term and long-term implications for the broader U.S. economy,” including higher construction costs, slower schedules and a slowdown in broader economic growth.
Later that month in Columbia, a panel discussion at the Maryland Construction Network’s Construction Industry Summit, hosted by Baltimore-based insurance advisory firm RCM&D, focused on development, the current state of the industry and upcoming work in Howard County.

Sign of the Times

At the Maryland Construction Network’s Construction Industry Summit, held in Columbia and hosted by the Baltimore-based RCM&D insurance advisory firm, Harkins Builders Director of Project Development Stephen Rubin said his Columbia-based company is feeling the pain of the labor market.

“Hiring people today is extremely challenging. We’ve been told we’re too serious, and people don’t want to work that hard,” he said.

It’s certainly a testament to the company’s reputation as a hard-charging firm that upholds an intimidating standard, but in the view of Justin LaChat, business development manager for Columbia-based Morgan-Keller Concrete Construction, it’s also a sign of the times.

“Old-school carpenters and construction workers are retiring, and nobody’s replacing them,” he said. “They have a lot of expertise using the old, simple tools of their trade, but the younger generation coming in doesn’t want to use a mason’s string line; they want to use electronic gadgets with lasers that cost a lot of money, because that’s all they know.”

As a result, Morgan-Keller’s current search for a layout technician is proceeding slowly, LaChat said, “because it’s a skill that not a lot of people have, and it’s usually the older generation that has acquired it.”

Steamfitters and pipefitters are particularly hard to recruit at the moment, said Harkins Builders Project Executive Rick Kottke.

“It’s frustrating, because we have a lot of college graduates who can’t find jobs, but they don’t want to consider construction jobs, even though they’re available and pay very well,” he said. “One of the alternatives builders might have to consider is prefabricated, modular components.”

Tight Market

According to Scott Armiger, president of Ellicott City-based Orchard Development, the skilled labor market is so tight, it’s starting to affect some of his company’s pricing.

“General contractors, the Harkins Builders and Whiting-Turners, are having to expand their subcontractor base and look at areas outside of Baltimore and the District of Columbia to find workers,” he said. “They’re looking as far away as the Carolinas to find electricians, HVAC workers, masons and framers.”

That’s making some general contractors nervous, because they have no track records with some of the critical workers they’re hiring, and their reputations are ultimately on the line.
Moreover, Armiger said, “these workers are not likely to be that familiar with the codes here in Maryland, which get updated on a regular basis.”

It’s a situation that’s starting to change the way some construction firms and subcontractors are thinking about recruitment. “We’ve tried to start reaching out to junior colleges and even students at the high school level, trying to get more of them to see [construction] as a possible career choice,” LaChat said.

Get Used to It

Muscles atrophy when they’re not used, and that’s part of the explanation why construction is feeling a crunch at a time that’s brimming with opportunity.

After the recession hit, housing starts slowed to a trickle.
“We went from building 2 million homes a year to 500,000 homes a year nationwide, and a lot of the labor force left,” Armiger said. “In some cases, it went back home to Mexico or Central America, or it found other lines of work.”

Currently, housing start levels have risen to about 1 million homes a year, “but we’re still 400,000 to 500,000 off where we should be to sustain growth,” he said.

Even so, developers are having a hard time delivering projects on time.

“In the 1990s, when we were building a lot of apartments, we would see 100 or more framers on a job site,” Armiger said. “Now, 20 is considered a lot for the same type of project. The result is probably going to be higher home costs, and construction costs in general will probably rise slightly.”
The skilled labor pinch is probably shaping up to be the new normal, he said, and not a temporary obstacle that’s easily surmounted.

“Hopefully the skilled labor shortage will be remain manageable for the foreseeable future,” Armiger said. “But my sense is it’s going to be a struggle for a long time.”