Confidence is high. Demand is high. The population is increasing. The construction industry is projected for sustained growth. According to the most recent data compiled by US Census Bureau, total construction spending is up by 5.1% year over year (this represents non-seasonally adjusted dollars from Oct 17 to Oct 18).
The US population has grown by over 25 million since the Great Recession. The unemployment rate rests at 3.9%. This in part has lead to demand for more buildings, roads, homes, power, etc. to support the sustained increase in taxpayers in the US.
Construction and Specialty Trades should expect to be busy for quite some time even with the recent stock market volatility, the potential trade war, and the government shutdown.
Demand is present. So what is the outlook for the Construction Industry?
Skilled Labor Concerns
Immigration
Call it what you want, but a large chunk of the skilled labor force is composed of immigrants, both legal and illegal. As immigration regulation becomes greater, that labor force is going to continue to decrease. Baby boomers have relied on these workers for decades to cut costs in terms of pay, benefits, workers comp insurance, payroll taxes, etc. The arrangement seemed to work well for both sides. The employer saves on payroll and the worker has an opportunity to provide for their family that they wouldn’t have in their own country. Win, win right?
The impact now is that there aren’t enough US-trained workers to fill the demand of construction and infrastructure projects being procured in this country.
Generational Labor Gap
Additionally, a generational gap exists between skilled workers and young men and women set to enter the construction & specialty trade industry. Baby boomers are closing in on retirement and Generation Z’ers are concerned with the mountain of debt they will be left with to earn a bachelor’s degree.
There exists an opportunity for the construction industry and specialty trades engage with the younger generations and “show them the ropes” and more importantly educate them on this career possibility.
This is a highly skilled sector of the labor force that needs proper training. For example, an electrician needs to learn how to properly wire a home or building to code so that the home doesn’t burn down. This means using properly gauged wire, not overloading a circuit, making sure there’s enough voltage to operate appliances, etc. And, a plumber needs to properly route water and sewage without any leaks to avoid dry rot and costly water damage. Specialty trades and construction owners need not only an education but countless hours of on the job training.
There are several ways to develop and educate future workers in the construction trades.
- Lessen the pressure on young people to obtain a bachelor’s degree.
- Expand internship opportunities & apprenticeships to high school and community college students.
- Add educational, elective curriculum that focuses on the trades at the high school and community college level.
- Encourage Trade & Vocational School classes and certificate programs as a positive educational path.
- Connect with the career centers of local military offices to offer internships and apprenticeships for those soldiers set to be discharged.
- Introduce the technology used in construction to interest a younger generation raised on technology
Tradesmen deserve much more credit than they are given and although it may not be the most glamorous career choice given the physical demands, it is one that will always be needed. And skilled tradesman will be of interest to a US population that continues to grow by leaps and bounds.
Technology
Having worked with many different construction business owners over the last 9 years, we have learned technology is and will continue to enhance the efficiency of this industry. As equipment and it’s technology evolve, our clients can perform better work and do it more efficiently.
Drones
One of the most common technologies being used is drones. Land surveys and aerial photography used to be conducted by planes which was time consuming and expensive. Now, drones are loaded with high definition, 4k cameras and software that can tell you many things like how much dirt or other material is located within a certain location. It can measure square miles, topography, and the type of raw material located within that area. Not only is this fascinating what a small machine can do, it is far more efficient and the body of work is much more robust.
Cloud Software
Cloud software is another advancement that has improved the quality of work in the construction and specialty trade industry. It keeps a business owner organized. Today’s cloud software collaborates with sub-contractors to track change-orders, hours worked, cost of goods, job progress, etc. Cloud software not only keeps a job running smoothly, it makes sure that there is no lost revenue as well.
Artificial Intelligence
Lastly, Artificial Intelligence is perhaps the most buzz worthy topic in technology today. As machinery evolves and takes some of the heavy lifting out of manual labor, machinery and robots are able to learn on the job. Robots work alongside a human and learn to predict change orders for a job and foresee a potential job site hazard that could injury a worker or cause a fatality. And this is just the beginning of where this technology can go.
Workplace Safety
Another reason to give construction workers credit, is the incredible risk they take on a daily basis. Major injury and death are an unfortunate reality in this sector of the labor force.
The good news is that the fatal injury rate decreased by 3.6 percent in 2016 and decreased by another 3.5% in 2017 according to Census of Fatal Occupational Injuries report.
Continuing to prioritize safety and training is crucial to the construction and specialty trade industry. It’s a necessary investment for the success of your business and to retain good, skilled workers.
Recent Jobs Report
In December 2018, the Bureau of Labor Statistics reported that 312,000 jobs were added which was the 2nd highest number of the year behind February 2018 addition of 324,000 jobs.
The average monthly increase in U.S. construction jobs in 2018 was 23,000, which was slightly higher than 2017’s average monthly increase of 21,000. In 2018 there were 280,000 total jobs added versus 250,000 in 2017.
Lastly, construction workers also saw a 4.2% uptick in hourly wages versus an economy wide 3.3% increase.
The numbers look good. As always, if we can support your construction or specialty trade business some additional business funding, follow the link below to get started.