The construction industry is at a crossroads. On the one hand, the demand for the construction workforce has never been greater. Driving this demand is the growth in worldwide population (9 billion by 2050) and the increase in people living in cities (two out of three people living in cities by 2050). On the other hand, challenges in things like productivity, performance, digitization, a decreasing construction workforce and sustainability could derail the industry’s growth, even though construction is already among the world’s largest industry sectors.
But the biggest issues the construction industry faces are workforce challenges—especially the growing shortage of skilled construction workers. These challenges are starting to place intense pressure on construction companies trying to not only compete within their sectors but also maintain safety at construction sites. Businesses that ignore these issues will struggle to survive. Some will even wither and die. Businesses that confront these challenges head on, however, will enjoy tremendous growth. The key is taking proactive action at the right time.
The Future of the Construction Industry Looks Bright
The future of the construction industry looks bright. It continues to enjoy a growth spurt that started in 2012. The growth taking place in the United States is illustrative of what’s happening worldwide. Construction spending in the U.S. from January to April 2016 was about $335 billion. That’s 8.7 percent growth over the $307 billion for the same period in 2015,
according to the United States Census Bureau. Forecasts see this type of growth continuing in the U.S. and worldwide at least for the near future.
But construction’s growth is shedding light on critical workforce challenges companies must tackle if they want to survive the future. These are challenges that go beyond construction workforce seeking higher pay. For example, one workforce challenge is generational. By 2030, Millennials will make up 75 percent of the world’s workforce. They have a different set of values and ethics than the Generation Xers and the Baby Boomers, many of whom have not yet retired. The differences in values and ethics sometimes create conflicts between veteran workers and new workers. These conflicts can hurt a company’s efforts to maintain peak performance and high productivity at construction sites.
Another workforce challenge for construction companies is technology adoption. Increasingly, construction companies are adopting the latest advancements in technology. Doing so boosts productivity, efficiency, and quality, as well as safety and profitability. But companies must be strategic when bringing in new technology. Veteran workers often resist new technology even when it makes their jobs easier and safer. Instead, they prefer using the old ways of doing something. To avoid blowback from these workers, companies are integrating technological advancements slowly and steadily, instead of force feeding workers all at once.
Labor Shortage Is the Biggest Challenge
But the biggest workforce challenge the industry faces is the shortage of skilled construction labor that’s now occurring. Construction companies first started to notice the shortage in 2012, just as the real estate sector started recovering from the crash of the early 2000s. Things have only gotten worse since then as more and more new projects start up. Employment just can’t keep up with the rate of growth of the construction industry. A recent study by the Conference Board ranked the construction sector ninth in its labor shortage index.
The study also shows that the construction industry faces a higher risk of labor shortage than many other occupational sectors, including plumbing and electrical. “The thing we’re seeing and hearing in the field is there’s just not enough qualified people at all,” says Jay McCanless, a home building analyst with Sterne Agee CRT in Nashville, Tennessee, in an article for Bloomberg. In fact, industry officials previously said that the construction industry “would be sizzling if not for a critical shortage of workers.”
Labor Shortage Delays Projects and Drives up Prices
The labor shortage delays projects and drives up prices, which hurts every sector of the industry—from high-rise developers to home builders. And the issue will only get worse as more and more projects come online. The U.S. Bureau of Labor Statistics sees a 13 percent growth rate in the construction sector through 2024, creating approximately 180,000 jobs in the process. If you add in a conservative replacement rate for retiring Baby Boomers, you get a final total of approximately 458,000 jobs coming online in the next decade that construction companies will need to fill.
But many students in the United States are going right to college after high school bypassing good positions in construction. Meanwhile, the number of new workers joining the construction industry is slowing yearly. “The percent of hires accounted for by the 19-25 age group declined from approximately 18 percent at its peak before 2006 to 13 percent in 2012-13,” says Hubert Janicki and Erika McEntarfer in an article in
The Wall Street Journal.
Key reasons for a lack of skilled construction workforce in the U.S. is a cultural shift away from traditional blue-collar jobs, a lack of vocational education and training schools, and a huge loss of talent that occurred during the last economic downturn. Construction companies failed to replace that talent over the years and now it’s being felt in the industry. What’s happening in the U.S. reflects what’s occurring worldwide.
Overcoming the Lack of Skilled Labor
Construction companies will have to be proactive in finding solutions to the skilled labor shortage they’ll face in the coming years. Career colleges can play a prominent role in filling in the labor gap:
“Career colleges and universities equip students with the skills they need to find construction industry jobs, and their emphasis on career-oriented education also helps employers find qualified candidates. Career education will play an essential role in helping American businesses confront the looming labor shortage in the construction sector and ensure that the American economy continues to build and grow,” said Steve Gunderson, president/CEO, Career Education Colleges and Universities.
Supporting these institutions seems like a no-brainer for construction companies. Other ways they can overcome the labor shortage in the future include:
- Creating a culture based on safety
- Screening new applicants carefully
- Improving training opportunities/facilities
- Encouraging the transfer of knowledge
- Working with manufacturers to bundle installation with sales
- Hiring vets making the transition back to civilian life
- Supporting employees with additional training and safety measures
Construction companies will also need to start thinking outside the box to deal with the labor shortage in order to strengthen its construction workforce. For example, one construction company turned to robotics as a solution. For example, Blueprint Robotics builds homes and commercial properties in the United States at its Baltimore plant using an assembly line approach. Blueprint’s robots pound thousands of nails into studs daily. The robots never miss. Ironically, Blueprint brought in the robots not to eliminate jobs at its construction site but to fill in the labor gap hampering the company.
Employing innovative solutions is what it will take construction companies to overcome the shortage of skilled construction workforce they’ll face in the future. The same holds true for the other workforce challenges the industry faces. Those companies that fail to take proactive action will struggle to survive. Those companies that take proactive action will grow and prosper.
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