The pipeline of business to Georgia’s construction industry looks terrific. In Smith & Howard’s 2019 “Georgia On the Rise: Trends in Real Estate and Construction” report, 93% of responding companies said the size of their projects was increasing or at least holding steady.
Staffing to properly handle those projects is a lot more problematic, however. For the third straight year of the Smith & Howard report, construction businesses said the availability of skilled labor presented their single-biggest financial challenge for the next 12 months. It’s not just a Georgia headache; the situation reflects a national challenge with more job openings than workers across all industries in recent months.
“We have seen the impact. There have been times where we cannot price projects because subcontractors are too busy and can pick and choose the type of work they wish to do,” said Pam Coleman, CFO of Alpharetta, Ga.- based T.D. Farrell Construction Inc. “This is a national issue, not just in the Southeast.”
She is right, and here is more evidence of the construction industry’s continuing nationwide struggle to find enough skilled workers:
• 80% of commercial construction companies in all regions, and 83% in Georgia, are having problems finding enough trained hourly employees, according to a 2018 industry-wide survey by the Associated General Contractors (AGC) of America and Autodesk.
• 56% of construction businesses across the country face difficulties filling salaried positions, AGC and Autodesk reported. Nationally, 81% of companies (up from 67% in 2017) expect to have a hard time staffing hourly jobs in the near future.
• 44% of contractors recently surveyed by The Association of Union Constructors and the Construction Labor Research Council said they declined to bid on some work due to shortages of “craft,” or skilled hourly workers. Contractors reported the biggest shortages among boilermakers, iron workers and carpenters. The Southeast poses the thorny challenge of strong economic and construction growth coupled with above-average skilled labor shortages.
Five Hiring Methods to Try Now
In such a historically tight labor market here are a few approaches to hiring that construction companies should explore:
1) Increasing compensation. Regardless of how consistently higher wages lead to higher-quality applicants and improved performance, base pay is rising across the industry. It’s become an essential, rather than optional, tactic.
In April, the U.S. Bureau of Labor Statistics reported the average hourly construction wage reached $30.21, a nine-year high. Nine of ten companies responding to the Smith & Howard survey said they had increased compensation to address worker shortages. And, according to the AGC/Autodesk report, 62% of construction companies said they hiked base pay rates in the preceding year.
It’s not just base pay going up, either. One in five Georgia construction companies use signing bonuses, Smith & Howard found. AGC and Autodesk report one in four companies offered improved employee benefits or offered various types of bonuses.
“We have increased our rates to compete in this market,” said Coleman of T.D. Farrell.
2) Becoming more creative in how you recruit. For example, college enrollment is down a bit nationally in recent years. On one hand, this trend should have a forward-thinking construction company establishing a good relationship with administrators of vo-tech schools in its markets. On the other hand, construction companies also could benefit from strong ties to deans at colleges and universities. Why? A student who is struggling with engineering, for example, might find construction superintendent to be an appealing career path.
One-third of respondents to the ACG/Autodesk survey are using staffing firms to fill jobs, and another third are hiring interns in hopes of identifying future key employees. In this tight labor market, those approaches are worth considering. Another productive tactic is revisiting your company’s standard job ads to be sure the writing seems fresh and current, all of the skills and qualifications desired are listed, and copy is tailored for social media.
“We have tried some of these approaches,” Coleman said. “We have internally tried to increase our own in-house recruiting, although it is extremely challenging in this market, because qualified candidates are getting multiple offers. Sometimes we win and sometimes we lose.”
3) Becoming more creative in who you recruit. The comparatively small presence of IT in the construction industry makes it a hard sell to millennials who have spent a lifetime engaged in and honing technology skills that are in high demand in other industries. A pipeline to the area Veterans Administration office to identify retiring servicemen and servicewomen could be more fruitful, because many of them leave the service with strong technical and analytical skills and experience with complex construction projects.
Also, this is the kind of marketplace in which broadening your pool of relationships with capable and reliable general contractor and subcontractor companies can tip the scales on whether you bid for a job.
4) Committing to ongoing staff training and career development to make your company more appealing. Nearly half of the companies contacted by AGC and Autodesk launched or increased in-house training over the last year, which was similar to what the Smith & Howard report found in Georgia. Skills training is an important component of employee retention at T.D. Farrell, Coleman said. While skills training is paramount to the employees and the projects, additional education and time spent on career development for emerging leaders should also be considered.
5) Addressing labor demand as well as labor supply. AGC chief economist Ken Simonson said 25% of U.S. construction companies are adopting methods to cut on-site work time. Examples are lean construction and virtual construction techniques, offsite prefabrication and Building Information Model (BIM) processes. An equal percentage of companies have invested in labor-saving technology such as drones, GPS, laser-guided equipment and 3-D printers, Simonson said.
The effectiveness of any of these approaches depends on many factors, including geography, the financial stability and profitability of the company, the most pressing needs of the organization and what other competitors may be offering.
Labor Availability to be a Major Issue for Years
If it isn’t already, creativity and flexibility in recruiting and retaining skilled labor need to become a top priority at construction companies. 45% of Georgia construction firms expect to find it even harder to hire over the next 12 months, according to the AGC/Autodesk study, and 29% more said hiring will remain just as tough. Only 2% of companies actually expected to find it easier to find skilled labor during the next year.
Based on the volume of T.D. Farrell’s work under contract, Coleman said she believes an extremely tight construction labor market in Georgia will create challenges for her company for at least two to three more years. “It will be that way as long as the [national] economy is growing,” she predicted.
For questions on skilled labor and employee retainment, feel free to contact a member of Smith & Howard’s construction team at 404-874-6244 or fill out the contact form below.
Special thanks to Pam Coleman, CFO of T.D. Farrell, who contributed to this article.