Steel Markets

AGC Survey Highlights Concerns of Construction Industry for 2016

Written by Sandy Williams

The Associated General Contractors of America released the results from their 2016 Construction Hiring and Business Outlook Report. Survey responses from more than 1,500 construction firms indicate that the construction industry is optimistic about business opportunities for 2016.

A mix of private and public sector market segments are expected to drive demand for construction in 2016. New work is anticipated for hospital, private office, multi-family residential, and higher education and K-12 construction projects. Respondents are most optimistic about the outlook for retail, warehouse and lodging.

Survey respondents indicated less optimism for construction in manufacturing, transportation, power and direct federal construction. The survey was completed, however, before Congress enacted legislation to increase highway, transit and direct federal agency spending.

AGC noted that 71 percent of firms expect to increase headcount to meet the stronger demand. Most (63 percent) expect to increase employees by 1 and 25 percent, while 8 percent are planning on 25 percent or more new hires.

A continuing issue for the industry, however, is the shortage of qualified available workers. Seventy percent of firms reported having a hard time finding salaried or craft professionals. Anecdotal comments during the media call indicated that construction firms are competing for the same limited pool of workers. Bigger projects are drawing construction employees away from other regions.

The survey found that 69 percent of respondents predict that labor conditions will remain tight or worsen during the coming year. In attempt to attract workers, firms have increased wages and benefits and invested in training development and IT software.

“What is particularly striking about the findings on worker shortages is that they are consistent with the responses from last year’s Outlook,” said Ken Simonson, the association’s chief economist. “In other words, after a year of raising pay and increasing benefits, contractors remain as worried about the lack of qualified workers as they were at the beginning of 2015.”

The lack of qualified workers is also considered a major challenge to workplace safety according to 47 percent of firms and a minor challenge for 37 percent of firms.

During the media call, Gary Smith, president of Seattle-Washington-based Lease Cruther Lewis, said that finding mid-career level people with experience was the greatest challenge for hiring in his region. During the recession many construction workers left the industry and never returned.

Mike Kaiman, Southeast Texas Vice President for Turner Construction, noted that construction related to the oil and gas industry has essentially stopped in the Houston area. Workers who left construction for the energy industries during the recession are returning but need restraining and reclassification. The return is helping somewhat with the shortage of available workers. Based on the Texas survey, worker shortage and worker quality are the greatest concerns for contractors in the state.

Firms are attempting to work more efficiently with less staff to achieve higher productivity. Investment in information technology has increased in the industry. Forty-two percent of respondents are now spending one percent or more of revenue on IT, up from 32 percent in the past two years. Firms are hoping that investing in software will help them compete in the market and win more business.

Adoption of cloud-based software is increasing, making it easier for teams to collaborate in the office and field. Concerns of cybercrime have led to more firms (75 percent) tightening security to dissuade hackers. Connectivity and reliability is also a problem when working in steel and concrete intensive construction areas.

Changes in federal regulations and increased healthcare costs are additional challenges for the construction industry. The OSHA partnership program was eliminated under the Obama administration in preference to a regulatory enforcement approach to safety rather than collaboration. Contractors reported being worried about the rapid expansion and scope of federal, state and local regulations. Healthcare costs increased in 2015 for to 79 percent of firms surveyed and 81 percent expect costs to increase in 2016.

“As long as local, state and federal officials are willing to act on our workforce measures, embrace a more rational approach to regulations, identify measures for controlling healthcare costs and protect e-commerce, the industry should continue to expand,” said Stephen Sandherr, AGC’s chief executive officer, referring to policy proposals the association is making. “That is precisely why we will continue to focus our energies on ensuring the continued growth of this industry.”

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