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Construction Boom Faces Labor Bust

Tuesday, November 26, 2013

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U.S. construction and engineering may be facing the best and worst of times, as a near-trillion-dollar industry forecast collides with widespread employer reports of a skilled labor shortage.

Both assessments come from FMI, a Raleigh, NC-based provider of management consulting and investment banking services to the engineering and construction industries.

While FMI's 2014 U.S. Markets Construction Overview estimates $977 billion in total construction put-in-place next year, more than half of the general contractors and construction managers responding to the firm's 2013 U.S. Construction Industry Talent Development Report are reporting a skilled-labor squeeze.

'The War for Talent'

"The Great Recession is behind us, as the economy slowly starts to rebound," the Talent Development Report says. "The war for talent, which never really went away, is now back in the forefront.
 
LaborShortage-FMI
Images unless indicated: FMI

Surveys were sent to more than 3,600 general contractors and engineering firms, FMI said.

The report explains: "Baby boomers are starting to think about retiring again, with Gen X and Y taking their places.

"As the boomers leave the industry, taking with them valuable experience, business contacts and years of knowledge that is difficult to replace, companies must start preparing for a changing workforce."

For the first time in the annual survey, FMI asked employers if they were facing a skilled-labor shortage. The answer was a resounding yes
 
'Dirty, Difficult, Dangerous, Low-Paying, Unethical'
 
Asked what was driving that shortage, a whopping 93.3 percent reported a "lack of skilled workers," and half of respondents said that workers had moved on to other industries during the recession.
 
More damning, perhaps, was the No. 3 barrier, cited by four in 10 respondents: the industry's "poor reputation," which makes it an undesirable career for many groups, especially women and non-whites.

"The construction industry has long battled an inconsistent image," writes Kelley Chisholm of FMI. "Many people perceive the construction-related work as dirty, difficult, dangerous, low-paying, unethical and discriminatory to women."
 
Whiter, More Male
 
Women currently hold about 10 percent of management/supervisory positions in construction—a figure that has not changed in six years, FMI reports. Meanwhile, the number of women working in the trades decreased from 8 percent in FMI's 2011 survey to 5.9 percent this year.
 
WomenInConstruction

The percentage of women in construction management has not changed in six years, FMI reported.

In addition, 85 percent of survey respondents in management or supervisory positions identified themselves as white (not of Hispanic origin)—an increase from FMI's last survey, when the same figure was 80 percent.
 
Poaching and Other Practices
 
Companies are trying a variety of strategies to prepare for the changing workforce. The top strategies cited (and the percentage of respondents using them):
  • Promote internally to key positions (84.2 percent);
  • Provide internship/co-op programs (75.4 percent);
  • Train to improve performance in specific competencies (75.4 percent);
  • Employ "best practices" to retain key talent (66.7 percent); and
  • Establish core competencies by position (61.4 percent).

Companies also said they were stepping up recruitment at schools and colleges (50.9 percent) and among experienced talent (49.1 percent), and nearly one in four admitted to "poaching" employees from other firms.

Reaching Out

FMI says the industry can attract more women by promoting itself to young women and girls at high schools, universities and technical schools; actively recruiting; ensuring a supportive, non-discriminatory worksite; structured mentoring; and offering flexible scheduling and "opportunities to balance work and personal life."

FMIChart

The industry has a severe image problem that is hurting its ability to recruit women, non-whites and young people, FMI's survey found. The company suggests strategies to counter the trend.

Some of those same strategies will also help attract non-whites, FMI said. In addition, employers can help potential applicants who face language barriers by pairing them with bilingual mentors, offering English as a Second Language (ESL) classes, and teaching them safety and construction terms.

(Fatal Inequality, a recent study by the Center for Popular Democracy, found a disproportionate number of fatal falls among Latino and immigrant workers.)

Finally, FMI notes that the industry must find younger blood by reaching out to teens and school-age children. "This is not an easy task," the firm concedes, "but some programs to exist to attract young people to the construction world."

ACEMentoring
ACE Mentor Program

Founded in 1994, the ACE Mentor Program has awarded more than $12 million in scholarships.

The report cites the success of the ACE Mentor Program of America, founded in 1994 by leading design and construion firms.

Now the construction industry's fastest-growing high school mentoring program, ACE reaches more than 8,000 students annually and has awarded more than $12 million scholarships since it was founded, according to FMI.

The Boom Ahead

For companies that are staffed and trained to deliver, FMI predicts a robust year ahead for construction and engineering in the U.S.

The predictions include:

  • Growth of residential CPIP from $338.2 billion in 2013 to $379.6 billion in 2014;
  • Growth of health care CPIP by 6 percent in 2014 to $44 billion;
  • An 8 percent increased in transportation construction in 2013 and a 7 percent increase in 2014;
  • A 4 percent increase in manufacturing construction in 2014, after a 2 percent drop in 2013; and
  • Sewage and waste CPIP reaching $21.3 billion in 2014.

Trendspotting

Key trends for employers to watch, for better or for worse, according to FMI:

  • The possibility that the U.S. will produce more oil than it imports by late 2014, due to a shift from shale-gas to shale-oil production;
  • Continuing business uncertainty from the federal government’s fiscal difficulties and implementation of the Affordable Health Act;
  • Succession planning and talent challenges as baby boomers continue to retire;
  • Increasing use of modularization and prefabrication, improving productivity across the construction value chain; and
  • Increasing U.S. coastal infrastructure opportunities as a result of the expansion of the Panama Canal starting as early as 2014.

   

Tagged categories: Construction; Education; Engineers; Health Care/Hospitals; Labor; Market forecasts; Residential Construction; Transportation; Wastewater Plants; Worker training

Comment from Gregory Stoner, (11/27/2013, 5:32 PM)

The same conversation that was occurring before the economic collapse just a few years ago. Maybe with a little effort the ultra rich can create another calamity to keep the working middle class from retiring thereby keeping wages low.


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