AGC of America

Carpenters Messaging, Teaching, Recruiting Earlier than Ever Before

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By KERRY SMITH, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Organizations like the Mid-America Carpenters Regional Council are approaching students at younger and younger ages to introduce them to the possibility of pursuing a construction career.

Scott Byrne, St. Louis regional director of the Carpenters, says recruiting – and translating the trades to skills and experiences that ring true for elementary and middle school students – is what it’s all about.

“The days of standing behind a table at a high school jobs fair are long gone,” said Byrne. “Today we’re communicating with students beginning in second and third grade, teaching them how to build a birdhouse and a doghouse and showing them what building with their hands is all about.”

Another innovative entry the Carpenters has made is building relationships nationwide with high school career counselors and mathematics instructors. Byrne says the regional council is currently integrating real-world math skills building in 114 high schools across Missouri.

“Our international union, the United Brotherhood of Carpenters, created career connections, a component that offers math curriculum that’s very practical and useful in the field,” he said. “For example, rather than teaching theoretical geometry, we’re teaching students how to learn the Pythagorean Theorem so they can understand how to lay out a building very quickly. We’re working alongside talented mathematics teachers, showing them a real-world way to apply lessons in geometry, trigonometry and calculus through the context of construction practices.”

Brian Turmail, spokesman for the Associated General Contractors of America, says communicating regularly with high school guidance counselors is also critical. “Students and their parents need to hear that there is another real option out in front of them as an alternative to a four-year college education,” Turmail said. “It’s bonkers that many K-12 students still are not hearing about the pathway through a construction career track. When we speak with our members and their AGC chapters across the U.S., one of the subjects that comes up every time we discuss workforce development is reaching guidance counselors.”

Idaho passed legislation that requires guidance counselors to present vocational education as an option, he said.

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U.S. Construction Adds 25,000 Workers in January, Firms Raise Wages

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Construction firms across the country added a total of 25,000 employees in January and increased pay levels for hourly workers more than other sectors did last month, according to an analysis of government data by the Associated General Contractors of America.

Association officials reported that the industry has been benefitting from relatively strong demand for construction projects as firms struggle to fill available positions.

“Construction employment totaled a record 7.88 million people (seasonally adjusted) in January 2023, which equates to an increase of 294,000 employees or 3.9 percent from a year earlier,” said Ken Simonson, AGC of America chief economist. “In fact, most contractors would like to hire even more workers and are raising pay in an effort to attract them.”

Nonresidential firms – including commercial, industrial and heavy highway contractors, specialty contractors and heavy and civil engineering companies – added 19,300 workers in January and 179,200 employees or 4 percent over the past 12 months. Residential building and specialty trade contractors together added 5,500 employees last month and 114,600 employees or 3.6 percent over the year.

Pay levels in the U.S. construction industry continue to increase. In January, they rose at a faster pace than in the overall private sector. Average hourly earnings for production-specific nonsupervisory construction workers, mostly hourly craft workers, climbed by 6.2 percent – from $31.44 per hour in January 2022 to $33.38 hourly in January 2023. That year-over-year increase exceeded the 5.1 percent increase in average pay for all private sector production workers. Construction workers now earn an average of 18.1 percent more per hour than in the private sector as a whole.

“Construction firms are doing everything in their power to recruit even more people into the industry,” said Stephen Sandherr, the AGC of America’s chief executive officer. “Closing a federal funding gap that puts five dollars into college-track programs for every dollar spent on career and technical education will help expose many more workers to high-paying career opportunities in fields like construction.”

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Bid Prices Increase in October from Wages, Delivery Delays, Diesel Costs

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

October 2022 national data reflects a sharp rise in bid prices as contractors continue navigating ongoing supply chain challenges, labor costs and more.

The Associated General Contractors of America Chief Economist Ken Simonson says rising construction costs continue threatening to undermine demand for projects. He urges administration officials to remove remaining tariffs on construction materials and to boost investments in construction-focused education and training.

“Although some material costs have moderated, other costs are still climbing regularly while contractors are incurring added expenses from delays caused by supply chain disruptions, shortages of skilled labor and rising interest rates,” Simonson said. “Some owners may delay or cancel projects as the price to complete them continues to increase, threatening to undermine overall demand.”

A 3 percent jump in the producer price index for new commercial construction – the measure of what a fixed group of contractors estimate they’d charge to build a specific set of nonresidential projects – occurred from September 2022 through October 2022. Over the past 12 months, the PPI increased 11.2 percent and 20.2 percent over the 24-month span from October 2020 through October 2022.

Simonson added that the input price, however, does not capture contractors’ added costs from materials that are not delivered on schedule. It also doesn’t include rising wage rates and overtime pay, nor does it factor in the financial costs associated with delays.

Several material categories posted double-digit spikes in October as compared with 12 months earlier. The PPI for diesel fuel soared 9.8 percent for the month and 61.5 percent year over year. The index for cement, Simonson says, rose by 2.5 percent last month, bringing the year-over-year increase to 13.4 percent. And the index for architectural coatings – such as paint – surged 1.1 percent for the month and a whopping 27.5 percent over 12 months.

“Tariffs and regulations are making construction more expensive,” said AGC of America CEO Stephen Sandherr. “If left unchecked, they will undermine private-sector demand for projects and limit the impacts of new infrastructure investments.”

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Digital Skills Gap Amplified by Pandemic, AGC Survey Says

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

As construction industry workforce shortages have grown since the pandemic, so has the measurable gap in digital skills, according to a recent Associated General Contractors of America member survey.

The survey, conducted in July and August, polled 1,266 individuals associated with construction companies of all sizes from across the U.S. Survey findings revealed that 47 percent of firms are boosting internal spending on training and 25 percent are increasing their budget dedicated to online skills training. Companies are seeking to replace long-time workers who retired over the past two years as well as add positions to keep pace with increased project loads.

“More than one-half of all construction companies surveyed said they’re engaging with career-building programs offered by universities, training centers and other educators,” said Allison Scott, director of construction thought leadership and customer marketing at Autodesk, developer of design and make technology for architecture, engineering and construction firms. “A total of 16 percent reported that they’re using augmented reality and virtual reality to help train their workers.”

The industry’s increased demand for those experienced in using construction technology is putting the squeeze on already tight workforce supply. “Digital nomads,” defined by Scott as those who have not yet adopted construction technology, are recruiting hard to attract digital natives, those who’ve been using construction technology since its inception.

In addition to AR and VR, examples of sought-after construction technology skills include fluency in estimating software, building information modeling, mobile apps, construction management software and drone operation.

“Trying to stay ahead of the curve is extremely challenging for construction companies that haven’t consistently adopted industry technology as it has been introduced,” said Scott. “Future growth of their companies depends upon it.”

AGC of America Chief Economist Ken Simonson agrees.

“It will take time to see companies’ training initiative bear fruit,” he said. “Right now, too few people are prepared to work in this industry.”

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Industry Still Struggling to Find People, AGC Survey Says

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The Associated General Contractors of America’s latest workforce survey reveals that 77 percent of construction industry job candidates either lack the necessary skills or cannot pass a drug test.

A total of 1,266 individuals coast to coast representing all sizes of companies and all sectors weighed in on the survey during July and August.

According to AGC Chief Economist Ken Simonson, 93 percent of construction firms surveyed reported they have open positions they’re seeking to fill. Among those firms, 91 percent are having trouble filling at least some of those positions.

“Construction workforce shortages are severe and having a significant impact on construction firms of all types, all sizes and all labor arrangements,” Simonson said. “These workforce shortages are compounding the challenges firms are having with supply chain disruptions that are inflating the cost of construction materials and making delivery schedules and product availability uncertain.”

More than half (55 percent) of Missouri respondents indicated that their construction firm’s headcount has increased over the past year. Estimating personnel are the most needed salaried positions, according to Missouri firms, followed by project managers/supervisors and engineers.

Regarding the direst needs for craft workers, 91 percent of Missouri construction respondents identified concrete workers and carpenters as the most sought-after tradespeople, followed closely by cement masons and laborers.

Missouri’s surveyed response to the problem of filling available construction industry positions of all types tracked closely with the national statistic. Seventy-six percent of Show-Me State respondents identified job candidates’ lack of transferable job skills and inability to pass a drug test as the greatest barriers to hiring.

A total of 89 percent of those responding from Missouri companies of all sizes said their firm has increased base pay rates and/or benefits in the past 12 months. Eighty-two percent of those surveyed who work in Missouri reported schedule delays due to longer lead times, material shortages or both. More than half (54 percent) said upcoming projects have been canceled, postponed or scaled back due to increasing costs.

For more detail on the AGC’s latest construction industry workforce survey results, see https://www.agc.org/news/2022/08/31/construction-workforce-shortages-risk-undermining-infrastructure-projects-most-contractors-struggle.

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Some Material Prices Down, Construction Costs, Diesel Still Climbing

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Although the price of copper and brass has decreased slightly, the cost of gypsum, concrete and diesel fuel are still headed upward, according to the Associated General Contractors of America.

AGC Chief Economist Ken Simonson says numbers reported on July 14 show that nonresidential construction costs – material and services – rose 1.1 percent for the month of June.

“Some materials prices have fallen recently, but others appear headed for further increases,” he said. “In addition, the supply chain remains fragile and persistent difficulties filling job openings mean construction costs are likely to remain elevated despite declines in some prices.”

The producer price index for inputs to nonresidential construction – the prices charged by goods producers and service providers, such as distributors and transportation firms – jumped 1.1 percent from May to June 2022 and increased a total of 16.8 percent since June 2021. Meanwhile, the index for new nonresidential building construction – a measure of what contractors calculate they would charge to erect five types of commercial/industrial buildings – climbed by 0.5 percent from May to June this year and a cumulative 19.8 percent over the past 12 months.

Add to that the soaring cost of diesel fuel, which jumped 14.1 percent in June and has more than doubled over the past 12 months, and you have a recipe for continued price pressure on the cost of future construction projects, according to the AGC.

“The more materials prices increase, the harder it will be for public officials to build new schools, roads and other infrastructure,” said AGC CEO Stephen Sandherr, whose organization is urging the Biden administration to remove remaining tariffs on a range of construction materials. The AGC is also asking public leaders at all levels to do what they can to help unclog backed-up supply chains. “Taking steps to address rising materials prices will help construction employers and taxpayers alike.”

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Funding, Risk Allocation Driving P3 Delivery of Mega-Projects

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Public-private partnerships, P3s, continue to emerge as the preferred delivery mechanism for multi-year, multi-billion transportation and infrastructure ventures.

Associated General Contractors of America Vice President of Public Affairs & Strategic Initiatives Brian Turmail says ongoing mega-projects such as the $3 billion Fargo-Moorhead Red River Diversion and the $5 billion LaGuardia Airport Terminal B are relying upon P3 project delivery to bring these large-scale, big-dollar ventures to completion.

“Funding is often a big driver for P3s because they allow owners to move forward with a project without having to secure full financing on their own,” said Turmail. “However, P3 projects can be risky because they are often run by internationally based financiers who do not know or understand construction. These financiers produce contracts that are typically very long – hundreds of pages – non-standard and pass all the risks of the project to the construction teams.”

An international slate of project partners is heading both the Fargo-Moorhead Red River Diversion Project and LaGuardia’s new terminal. The former project is represented by the P3 of ACCIONA (the parent company of Spain’s Acciona Energy), Shikun & Binui USA (the domestic subsidiary of the Israeli-based infrastructure and real estate firm) and North American Construction Group, a Canadian heavy construction and mining contractor. LaGuardia’s P3 includes Parisian global investor and asset manager Meridiam, Swedish Skanska Infrastructure Development and Vancouver-based Vantage Airport Group.

P3 projects are also often complex, says Turmail, carrying more risk than smaller-scale efforts. “The quantities involved for these massive projects have very expensive ramifications when the assumptions are off, even by a little,” he said. “They fail sometimes due to overly optimistic revenue projection from parties bidding out the work.”

P3 projects are also risky because of their multi-year development and construction timeframes, Turmail says. Construction of the Red River Diversion Project, for example, involves building a 30-miles diversion channel to divert floodwaters around the metro area during severe floods and will take 10 years to complete. The project is estimated to wrap in 2027. The 1.3 million-square-foot Terminal B at LaGuardia Airport began construction in mid-2016 and will complete later this year.

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Missouri Adds Construction Jobs, Bloomsdale Excavating Doubling Workforce

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Missouri is the fourth-highest state to add construction jobs over the past two years, according to the Associated General Contractors of America.

AGC Chief Economist Ken Simonson said Missouri added 9,500 jobs between February 2020 and February 2022, a 7.4 percent increase in the state’s construction workforce. Missouri’s construction employment increase trails Florida (14,100 jobs), Utah (13,600 jobs) and Tennessee (11,400 jobs).

Nationwide, seasonally adjusted construction employment in February 2022 topped the February 2020 level in 32 states and lagged in 18 states and the District of Columbia, according to Simonson.

“For the month of February (2022) alone, construction employment increased in 39 states, declined in nine states and D.C. and was unchanged in Alaska and Louisiana,” he said.

In Bloomsdale, Mo., Bloomsdale Excavating Company, Inc. is contributing to construction employment statistics. President Scott Drury said the firm hired nearly 20 individuals in February and March and plans to hire 20 more this season.

“For a company of our size, this is significant,” said Drury. “We’re going to essentially double our workforce within a three-month period.”

Many of the new hires are crafts people, he said. Bloomsdale has been successful in recruiting union-skilled equipment operators and laborers, thanks to the robust apprenticeship programs run by the International Union of Operating Engineers Local 513 and the Missouri and Kansas Laborers District Council.

“We’re landing more projects in 2022,” Drury said. “With the supply chain issues, we’re trying as best we can to stay away from material-heavy projects.”

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Materials Price Increases, Choked Supply Hampering Projects

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

The price of construction materials spiked nearly 20 percent in 2021 overall despite moderating in December, according to Associated General Contractors of America Chief Economist Ken Simonson.

“Costs may not rise as steeply in 2022 as they did last year but they’re likely to remain volatile, with unpredictable prices and delivery dates for key materials,” he said. “That volatility can be as hard to cope with as steadily rising prices and lead times.”

Large St. Louis-based contractors say that during the pandemic’s infancy in mid-2020 until early 2021, they were able to place bulk orders for materials to be used for several planned projects. But increasing supply chain hurdles and scarcity of materials – such as roof joists and truss plates due to limited steel supply, framing lumber and engineered wood – are causing prolonged delays and wreaking havoc with project delivery amidst a tighter-than-ever pool of available skilled labor.

“Product is not coming online as quickly as projects are,” said industry expert Chris Bailey.

Bailey added that owners who put their construction projects on hold for two years are now signaling a green light to commence, but they’re getting sticker shock at revised project costs.

And as developers try to resurrect stalled deals, many are meeting with hesitation and more stringent requirements from investors and lenders.

AGC officials agree that rising materials prices threaten to undermine what is otherwise a strong outlook for the construction industry in 2022. AGC CEO Stephen Sandherr said the organization is urging the Biden administration to reconsider its plans to double tariffs on Canadian lumber and leave other trade barriers in place that artificially inflate the costs of key construction materials.

“Making lumber and other materials more expensive will not tame inflation, boost supplies of affordable housing or help the economy grow,” he said. “Instead, the administration should be removing tariffs and beating inflation.”

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Missouri’s Passage of Gas Tax Increase Allows Fed Infrastructure Match

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By KERRY SMITH, EDITOR, ST. LOUIS CONSTRUCTION NEWS AND REVIEW MAGAZINE

Passage of the $1.2 trillion Infrastructure Investment and Jobs Act bill, signed into law Nov. 15 by President Joe Biden, is a win for Missouri, says a regional transportation engineer, thanks to the state’s swiftness in passing a gas tax increase to raise enough dollars for the required federal match demanded by the federal spending bill.

Frank Weatherford, principal at TranSystems, credits Missouri lawmakers for passing a gradual gas tax increase – the first in 29 years – to allow the state to generate more than $500 million annually. Without passage of an increase, Missouri Dept. of Transportation officials predicted that the state would face an estimated $745 million annual funding shortfall for roads and bridges.

“We were very fortunate in Missouri that the legislature passed the gas tax increase (from 17 cents per gallon to 29.5 cents per gallon over five years) in order that we could match these new federal funds,” said Weatherford, “otherwise Missouri would have lost out on a four-to-one match. In a matter of weeks, Missouri pulled this off and made it happen. For states like ours where federal dollars are more than 50 percent of the state spend, it’s critical.”

Two subprograms contained in the new federal infrastructure bill, according to Weatherford, did not exist in previous federal transportation bills. They are: 1) A $6.4 billion carbon reduction program to allow for bicycle and pedestrian trails, transit and more, and 2) The PROTECT (Promoting Resilient Operations for Transformative, Efficient and Cost Saving Transportation) program, which channels $7.3 billion formula funding plus $1.4 billion in competitive grand funding to shore up and improve resilience of the transportation network – including highways, public transport, rail, ports and natural barrier infrastructure.

Stephen Sandherr, CEO of the Associated General Contractors of America, said passage of the federal infrastructure bill also provides needed investments to make infrastructure more resilient to extreme weather events.

“Because of the bill’s passage, state and local officials will be able to invest in a more efficient supply chain network and improve roads and bridges to make them safer and more reliable,” Sandherr said.

Missouri AFL-CIO President Jake Hummel agreed, saying the investment will boost the construction, steelmaking and concrete/asphalt production industries.

“This is a shot in the arm to not just the construction industry but also to the manufacturing base in the state of Missouri,” said Hummel.

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