By Doug Ford
The construction industry, both nationally and locally, took on a variety challenges this past year, many of which will likely continue to have an impact in 2020.
Despite these difficulties, the industry did well overall. While there are favorable signs of continued growth in the industry, there are still fears in the marketplace that have caused some to proceed with caution.
The biggest single factor, without question, is the lack of skilled labor. This one issue is dramatically influencing how many homes will be physically built in 2020. The skilled labor shortage, combined with an aging workforce and the influx of inexperienced workers, are contributing to the challenges already existing within the industry.
In a national survey produced by Autodesk and the Associated General Contractors of America (AGC) in 2019, 77 percent of construction firms in the Northeast report they are having difficulties filling hourly positions that represent the bulk of the construction workforce. This gap has continued to grow in the past year. (The details of the survey are available at www.agc.org/sites/default/files/WorkforceDevelopment_2019_National_Final.pdf)
Much of this pain originates from the economic downturn a few years back when many long-term construction/trade workers did not have work, resulting in more than two million lost jobs. Displaced workers were forced to look outside their field of expertise and many did not return to the construction industry.
Our current situation of an aging population, baby boomers retiring at a rapid pace and too few millennials entering into construction careers has produced a recipe for disaster.
The Saratoga Builders Association (SBA) formed a Task Force to tackle the problem on a local level. The primary focus is to encourage young people to consider a career in the construction industry by bringing an awareness to the benefits. SBA developed the following programs for high school juniors and seniors, as a way for them to learn about the various career trades:
• Local builders John Witt/Witt Construction Inc. and Matt Whitbeck/Whitbeck Construction LLC both did multiple 90-minute in-school presentations focusing on why they got into the construction business and their individual perspectives.
• A tour of Curtis Lumber headquarters in Ballston Spa featured educational sessions on estimating, design, logistics, and marketing to name a few were conducted to further expose students to another aspect of the industry. Material suppliers play a critical role and are overlooked as a viable and lucrative career path for young adults entering the workforce.
• On-site job tours of homes in various stages of construction will be conducted in the spring to allow students the chance to experience a working job site. The builders, along with the various trades, will be present to answer questions and explain the role they fill.
Along with the labor shortage, the construction industry has one of the highest rates of substance abuse and substance use disorders compared to other industries in the U.S., as noted in an article published by Confirm Biosciences. Among construction workers 18 to 49 years old, more than 21 percent were reported to have used illicit drugs during the past year. Financial losses due to alcohol and drug abuse may reach billions of dollars.
This situation will not improve in 2020, based on recent statistics. The pending legislation to legalize marijuana will continue to present challenges for the construction industry for obvious reasons.
Another challenge for the construction industry has been the volatility in building material costs. Products such as steel have become particularly problematic due to the political pressures levied on the tariff costs. Lumber and other commodity products have been a challenge for both builders and suppliers due to the dispute between Canadian and U.S. lumber companies and the problems arising from the differences in their respective forestry management principles.
In addition to the labor gaps and pricing pressures, other factors that have caused trepidation within the industry include political and regulatory uncertainty, national economic uncertainty, succession planning, immigration employment protocol, and rapid technology advancements.
Despite all of the challenges noted, the bottom line is that the construction market continues to experience solid results, both nationally and locally, and this will continue into 2020.
New construction will likely decline but remodeling will remain strong and continues to grow. Historically the Capital Region out performs other regions of the state and should continue to do so. The backlog for most contractors remains high, but a stable economy, improved international relationships and, most importantly, finding workers will drive the success in 2020.
By Doug Ford