Construction Industry Trends: October 2021 Roundup

That the construction industry is in the midst of one of the worst—and longest lasting—labor shortages on record is well documented. The lack of skilled labor, retention of qualified construction professionals and challenges with promoting construction career paths has been one of the industry’s top concerns since the mid-2000s. A recent deep dive by Construction Dive into all of the root causes of the construction labor challenge, however, paints one of the most complete pictures of the issue.

The first in a series of articles on the topic, Construction Dive looks at everything from the mid-2000s recession that led to massive layoffs, to the struggles with luring those professionals back to construction once the economy rebounded, and subsequent challenges like COVID-19, working conditions, lack of educational programs, retirement, younger generations of professionals gravitating toward other technology-focused careers and more.

The Takeaway: This is an excellent kickoff article and series we’ll definitely be following. The future of construction lies with the younger generations of tech-savvy professionals (which Construction Dive will focus on in its next part). 

Technology is not just transforming how contractors work today, it’s providing a new window of opportunity to create construction technology career paths—both in the field (using drones, robotics, wearable AI devices and more) and in the office (data analytics, cloud-based construction and project management, 3D modeling, etc.). Simply put, the construction industry is in an adapt or die phase, and thousands of contractors are choosing to digitize and modernize their operations to help scale their business and workforce futures.

Speaking of construction workforces, Construction Dive also recently highlighted one firm with a progressive approach to retaining its valued employees and keeping them happy. HITT Contracting in Falls Church, Va. is doling out “appreciation bonuses” to its team members, ranging anywhere between $1,000 and $10,000 per individual. The bonuses, made to both in-field and back-office employees, were largely in recognition of how HITT’s employees pulled together and sacrifices made during the COVID pandemic.

The company set aside $4 million of its recent profits to pay to its 1,300-plus employees on a sliding scale, based on time with the company and other factors. A larger firm, HITT Contracting is listed as #32 on Engineering News Record’s Top 400 Contractors List, with 2020 revenues of $2.5 billion.

"These team members made us stronger, exemplified dedication and grit, and kept American construction running,” said HITT CEO Kim Roy. “The success of our firm in the most challenging times is thanks to our frontline workers.”

The Takeaway: At a time when workforce challenges across all industries are making headlines, it’s nice to see companies making these types of human capital investments. One of the best ways to retain quality employees is to treat them like family. It may sound like corny business schtick, but countless studies have shown that the happier employees are, the more engaged and invested they’ll be in their company’s success. So things like bonuses, simplifying their workloads through technology, providing secure, developed career paths and more will go a long way to improving workers’ experiences and companies’ bottom lines.

According to recent data from the Associated General Contractors of America, contractors paid much higher prices for construction materials over the past 12 months than the prices they’ve charged on construction projects and construction contracts.

The association noted that from September 2020 to last month, the prices that producers and service providers such as distributors and transportation firms charged for construction inputs jumped 17%. The producer price index for new nonresidential construction—a measure of what contractors say they would charge to erect five types of nonresidential buildings—rose 5.2%.

“Construction materials costs remain out of control despite a decline in some inputs last month,” said Ken Simonson, the AGC’s chief economist. “Meanwhile, supply bottlenecks continue to worsen.”

The AGC, along with other construction organizations, is urging the White House to end trade tariffs with other countries-many enacted during the previous administration, as well as put measures in place to help shipping ports, transportation companies and more overcome current supply chain backlogs. 

The Takeaway: Like the labor challenge, rising material costs and supply chain issues have had a crippling effect on the construction industry. Hopefully, governmental measures will help, though ultimately, many of these cost and supply issues are tied to the pandemic itself. That’s why many contractors have upgraded their operational software and technologies to help them become more agile and efficient when it comes to labor, equipment and materials. Real-time data and tracking, cloud-based workflows and more are helping contractors not only eliminate material waste, but find the best prices available to them from larger pools.