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March 2015   

FMI Warns Craft Labor Shortage May Slow Construction


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Surveying members of the Construction Personnel Executives Group, FMI reports, "24 percent of respondents will be unable to bid more work and 32 percent will experience slow growth if their companies cannot reasonably meet the need for skilled labor and tradespeople.” Top executives at the largest contract firms in the U.S. took part in the survey.

"Overall, there’s an increase needed in skilled trade workers of more than 10 percent throughout the next three to 10 years,” says Ken Wilson, director for FMI, citing highlights from survey participants. One large construction company says, "Our current hiring forecast shows a need for 8,500 additional craft workers by 2017.”

The top five positions that are expected to be the most difficult to fill are operator (heavy equipment), welder (boilermaker), carpenter, pipefitter and ironworker (reinforcing).

There are two significant contributing factors to the high demand for craft labor:

1. The shift of the construction workforce to oil and gas related construction. FMI estimates that by 2017 nearly 10 percent of the total U.S. construction workforce will be part of this burgeoning segment of the industry.

2. The number of survey respondents that plan to increase the amount of work the company self-performs. Currently, surveyed firms self-perform less than 40 percent of construction projects. However, 65 percent either have plans to or are considering plans to increase self-performed projects.

This in-depth look into recruiting and retention of craft labor includes an analysis of the driving factors behind the skilled labor shortage, the most effective recruitment tactics and how companies are filling the demand for field management of the craft labor force. The report also provides practical counsel on how to develop human resource strategies to improve recruiting and retention rates.

Construction Employment Increases in 257 Out of 339 Metro Areas Between December 2013 and 2014 as Industry Predicts It Will Expand Headcount in 2015
Construction employment expanded in 257 metro areas, declined in 43 and was stagnant in 39 between December 2013 and December 2014, according to an analysis of federal employment data released Feb. 4 by the Associated General Contractors of America. Association officials said the construction industry should continue to expand in 2015, noting that 80 percent of contractors report plans to add new employees this year.

"While weather patterns certainly had an impact on construction employment during the past year, there is little doubt that the construction sector is in recovery mode in most parts of the country,” said Ken Simonson, chief economist for the association. "The industry should continue to add jobs in 2015 as private and public sector demand continues to grow.”

Dallas–Plano–Irving, Texas, added the largest number of construction jobs in the past year (15,200 jobs, 13 percent), followed by Houston–Sugar Land–Baytown, Texas (14,900 jobs, 8 percent); Chicago–Joliet–Naperville, Ill. (11,000 jobs, 10 percent) and Seattle–Bellevue–Everett, Wash. (8,700 jobs, 12 percent). The largest percentage gains occurred in Eau Claire, Wis. (38 percent, 3,300 jobs); Ogden–Clearfield, Utah (28 percent, 3,300 jobs); Monroe, Mich. (25 percent, 600 jobs) and Pascagoula, Miss. (24 percent, 1,500 jobs).

The largest job losses from December 2013 to December 2014 were in Bethesda–Rockville–Frederick, Md. (–3,900 jobs, –12 percent); followed by Phoenix–Mesa–Glendale, Ariz. (–3,400 jobs, –4 percent); Riverside–San Bernardino–Ontario, Calif. (–2,700 jobs, –4 percent); Gary, Ind. (–1,900 jobs, –11 percent) and Richmond, Va. (–1,800 jobs, –5 percent). The largest percentage decline for the past year was in Steubenville–Weirton, Ohio–W.Va. (–41 percent, –900 jobs); followed by Anniston–Oxford, Ala. (–13 percent, –100 jobs); Bethesda–Rockville–Frederick, Md., and Gary, Ind.

Association officials noted that one reason contractors are optimistic about their hiring plans is they expect demand in most market segments to grow this year. Yet they cautioned that the industry’s outlook could change if Congress and the Obama administration fail to identify ways to fund needed repairs to aging public infrastructure, including roads, bridges and clean water systems.

"While conditions are looking good for much of the industry, that could change if Washington can’t figure out a way to pay for our long-term infrastructure needs,” said Stephen E. Sandherr, the association’s chief executive officer. "But with the president and Congressional leadership exploring ways to finance new public works projects, there is a good chance the industry will continue to add jobs in many parts of the country this year.”

Construction Firms Add 39,000 Jobs in January, Bringing Employment to Highest Level Since 2009 as Sector’s Unemployment Rate Drops to 9.8 Percent
Construction employers added 39,000 jobs in January and 308,000 over the past year, reaching the highest employment total since February 2009, as the sector’s unemployment rate fell to 9.8 percent, according to an analysis by the Associated General Contractors of America. Association officials said the job gains come as most construction firms report plans to expand headcount this year, but worry about growing shortages of qualified workers.

"Contractors have stayed busy this winter and expect to keep hiring through 2015—if they can find the workers they need,” said Ken Simonson, the association’s chief economist. "The list of projects is growing in most states and most nonresidential segments, in addition to continuing strong demand for apartment buildings.”

Construction employment totaled 6,314,000 in January, the highest level in nearly six years, with a 12-month gain of 308,000 jobs or 5.1 percent, Simonson noted. Residential building and specialty trade contractors added a combined 20,100 employees since December and 162,400 (7.2 percent) over 12 months. Nonresidential contractors-building, specialty trade, and heavy and civil engineering construction firms-hired a net of 18,600 workers for the month and 145,600 (3.9 percent) since January 2014.

The number of workers who said they looked for work in the past month and had last worked in construction fell from 1,045,000 a year earlier to 811,000—the lowest January mark since January 2000. Although winter conditions typically result in a high January unemployment rate for construction, the 9.8 percent unemployment rate for these workers was the lowest January rate since January 2007 and represented a steep drop from a year earlier, when the rate was 12.3 percent.

"The combination of rapidly rising employment, good prospects for 2015, and a depleted pool of unemployed workers with construction experience means contractors may have a hard time filling jobs with the workers they need in coming months,” Simonson said. "Worker availability challenges have replaced a lack of projects as the biggest worry for many contractors.”

AGC officials noted that the new construction employment data is consistent with its Construction Hiring and Business Outlook, where 80 percent of construction firms reported they plan to expand head counts in 2015 (see previous article). But they cautioned that 87 percent of firms report having a hard time finding qualified workers.

"Construction firms appear ready to add jobs this year at the fastest rate in a decade,” said Stephen E. Sandherr, AGC’s chief executive officer. "But those employment gains depend on finding new ways to expose and prepare high school students for high-paying careers in construction.”

Dodge Momentum Index Falls in January
The Dodge Momentum Index fell 4.8 percent in January to 121.1 (2000=100), down from a revised 127.2 in December, according to Dodge Data & Analytics. The Momentum Index is a monthly measure of the first (or initial) report for nonresidential building projects in planning, which have been shown to lead construction spending for nonresidential buildings by a full year. During the final three months of 2014 the Momentum Index had jumped 11.7 percent, so while January’s 4.8 percent drop showed decreased activity relative to December, it was still in line with the moderate if at times hesitant upward trend that’s been present over the past three years. Compared to the same month a year ago, January’s Momentum Index was up 5.8 percent.

January’s decline for the Momentum Index relative to December was the result of decreased planning activity in both the commercial and institutional sectors. The institutional sector fell 10.2 percent, while the commercial sector edged down 0.4 percent. There were three commercial building projects exceeding $100 million that entered planning during the latest month: the $150 million Park District Office Building in Dallas, a $149 million office building in New York City and the $100 million Union Place mixed-use development in Mahopac, N.Y. There were four institutional projects over $100 million that entered planning during January, notably the $210 million UCF Downtown Campus (Creative Village) in Orlando, Fla.

Housing Markets Continue to Make Modest Gains
Markets in 63 of the approximately 350 U.S. metro areas nationwide returned to or exceeded their last normal levels of economic and housing activity in the fourth quarter of 2014, according to the National Association of Home Builders/First American Leading Markets Index, released Feb. 5. This represents a year-over-year net gain of 11 markets.

The index’s nationwide score moved up slightly to .90, meaning that based on current permit, price and employment data, the nationwide average is running at 90 percent of normal economic and housing activity. Meanwhile, 69 percent of markets have shown an improvement year-over-year.

"The markets are improving at a consistent pace,” said NAHB Chairman Tom Woods, a home builder from Blue Springs, Mo. "A growing economy and rising consumer confidence should help drive the release of pent-up demand in 2015.”

Baton Rouge, La., continues to top the list of major metros on the LMI, with a score of 1.41, or 41 percent better than its last normal market level. Other major metros leading the list include Austin, Texas; Honolulu; Houston; and Oklahoma City. Rounding out the top 10 are San Jose, Calif.; Los Angeles; Salt Lake City; Charleston; S.C.; and Nashville, Tenn.

"The encouraging news is employment, where the number of metros that reached or surpassed their norms rose by 23 in a year,” said NAHB Chief Economist David Crowe. "However, single-family permits are only at 44 percent of normal activity, and remain the sluggish component of the index.”

"More than 80 percent of all metros saw their Leading Markets Index increase or hold steady over the quarter, a strong indicator that the overall housing market is making headway,” said Kurt Pfotenhauer, vice chairman of First American Title Insurance Company, which co-sponsors the LMI report.

Looking at smaller metros, both Midland and Odessa, Texas, have LMI scores of 2.0 or better, meaning their markets are now at double their strength prior to the recession. Also leading the list of smaller metros are Grand Forks, N.D; Bismarck, N.D.; and Casper, Wyo., respectively.

The LMI shifts the focus from identifying markets that have recently begun to recover, which was the aim of a previous gauge known as the Improving Markets Index, to identifying those areas that are now approaching and exceeding their previous normal levels of economic and housing activity. More than 350 metro areas are scored by taking their average permit, price and employment levels for the past 12 months and dividing each by their annual average over the last period of normal growth. For single-family permits and home prices, 2000-2003 is used as the last normal period, and for employment, 2007 is the base comparison. The three components are then averaged to provide an overall score for each market; a national score is calculated based on national measures of the three metrics. An index value above one indicates that a market has advanced beyond its previous normal level of economic activity.

For historical information and charts, go to nahb.org/lmi.

World Demand for Power Tools to Exceed $32 Billion in 2018
Global demand for power tools is forecast to increase 4.8 percent per year through 2018 to $32.9 billion, an improvement from the gains recorded between 2008 and 2013. Advances will be fastest in the world’s developing areas, where significant and increasing levels of construction spending are expected. China and India, which are in the process of modernizing their housing stock, will see particularly rapid growth in power tool demand. Among developed nations, power tool sales will be boosted by improved economic conditions and increasing construction activity in the United States and throughout much of Western Europe. Electric tools account for the vast majority of total power tool sales, a reflection of their ease of use compared to other power tool types. These and other trends are presented in "World Power Tools,” a new study from The Freedonia Group, Inc., a Cleveland-based industry market research firm.

In 2013, the United States was the world’s largest consumer and second largest producer of power tools, accounting for 24 percent of sales and 12 percent of output. Between 2013 and 2018, the U.S. market will account for approximately one-sixth of additional global sales. As analyst Kyle Peters notes, "The country is a significant market for power tools because it is home to substantial tool using industries such as construction, general manufacturing and motor vehicle production and repair. In addition, there is widespread interest in do-it-yourself activities, resulting in a sizable consumer market.”

China was the second largest national market for power tools in 2013, with 10 percent of global demand, and was the largest producer, with one-third of global output. In addition, power tool growth in China through 2018 will be nearly double the global average. However, India will post even more rapid gains among major countries, albeit from a very small base. Both countries have extremely low power tool market penetration rates, with widespread adoption limited by the high initial purchase price of power tools compared to non-powered hand tools. Poverty and unreliable electric grids also play a role, particularly in rural areas. In both countries—and elsewhere in much of the developing world—the availability of low cost laborers utilizing hand tools has also adversely affected power tool sales, as it is often less expensive to pay additional laborers than it is to purchase and train laborers to use power tools. China, India and many other developing countries hold substantial pools of potential power tool users, which will fuel demand going forward as their economies continue to grow.

"World Power Tools” (published 01/2015, 407 pages) is available for $6,500 from The Freedonia Group, Inc. For further details, contact Corinne Gangloff at (440) 684.9600 or pr@freedoniagroup.com. Information may also be obtained through www.freedoniagroup.com.

People in the News
Jack Walker, a long-time associate of National Gypsum Company, has won the company’s Researcher of the Year Award. Walker, a member of the Technology Innovation Center, works with customers and the company’s sales force to provide technical and product solutions. He began his career with NGC in 1977 as a sales representative.

Atlas Roofing Corporation, Atlanta, announces Tom Robertson’s role as business unit manager for the Atlas Wall CI Division. He will oversee the wall insulation business unit, including marketing, sales, product development and customer relationships.

Prior to joining Atlas Roofing, Robertson was the director of international sales at Parex USA, Inc., for more than 15 years.



Putzmeister America, Inc., Sturtevant, Wis., has hired Krzysztof Jechorek and rehired Carl Michelson as technical services representatives.

Michelson is responsible for visiting customers on site to deliver and set up new equipment, conduct education sessions and service older equipment. He began his career as a technical services representative with Putzmeister 20 years ago. He then worked as a subcontractor for Putzmeister in the Philippines for three years, prior to rejoining Putzmeister full-time.

Jechorek works with the Putzmeister parts and service department to troubleshoot, diagnose and repair equipment issues for customers. Prior to joining Putzmeister, Jechorek served as a technician for the Kriete Group at Racine Truck Sales and Service, Inc. servicing Mack® and Volvo semi trucks and Hino medium duty trucks.

Mike Holland has been named to the position of chief operating officer by The Marek Companies headquartered in Houston. Holland will oversee the operations for the award winning specialty subcontractor’s offices in Houston, Dallas–Ft Worth, San Antonio, Austin and Atlanta.

"We selected Mike to provide the leadership and sustainability for our overall operations as we position the company for continued growth throughout our markets over the next decade,” said Stan Marek, president and CEO of the Marek Family of Companies. "Holland, a proven leader with over 40 years of experience in the construction industry, has served the Marek Companies as the Houston division president for the last 31 years.”

In addition to his role with the company, Holland serves on the boards of several industry organizations including the Association of Associated Builders and Contractors Houston Chapter, American Subcontractors Association Houston Chapter and the Construction Career Collaborative. He is a member of the Texas A&M Construction Industry Advisory Council and is involved in the community as a board member of the Greater Houston YMCA, the Foster Family YMCA and Covenant House Association.

Fabral, Lancaster, Pa., announces the promotion of Scott Abraham to territory sales manager for the regions of northwest Minnesota and North Dakota. Abraham has worked at Fabral since February 2014 as business development manager and now transitions into this position bringing more than 10 years of industry experience and knowledge.

Abraham’s previous experience includes selling and estimating for sizeable dealers that used many of Fabral’s building products.

Companies in the News
Gypsum Management and Supply, Inc., Tucker, Ga., has signed an agreement to acquire Serrano Drywall Supply in Iowa City, Iowa. Serrano Drywall Supply will become the 11th location under Tamarack Materials, a GMS company with current locations in Minnesota, Wisconsin and the Dakotas. The deal marks the strategic entrance of GMS into the Iowa marketplace.



Affiliated Distributors, Wayne, Pa., reported record sales in 2014. Sales for all AD members, across all AD divisions and countries, grew by 9 percent to $31.2 billion.

Bill Weisberg, AD’s chairman and CEO said, "AD members achieved above market growth in 2014, opened 83 locations, made 23 acquisitions and hired 2,180 new employees. On top of that, we added 30 new members, 40 new suppliers, expanded into Mexico, introduced new programs, expanded our service set, and upgraded our systems and reporting. 2014 was a record year.”

By division, AD member 2014 same store sales grew as follows: U.S. electrical, up 8 percent; Canadian electrical, up 9 percent; industrial, up 5 percent; plumbing and PVF, up 8 percent, HVAC, up 9 percent; and building materials, up 16 percent.

Products in the News
Architects, engineers and contractors can now find product information on the complete line of Liquid Nails brand adhesives and Top Gun caulks and sealants on the Arcat database for specification in a variety of construction projects.

Serving as an online resource center for nearly 3 million architects, engineers and contractors, Arcat provides a database of technical data, catalogs, videos and specifications from more than 11,000 manufacturers. Also, Arcat green reports LEED® credits for various building projects and materials, including a listing of LEED®-certified Liquid Nails brand green adhesives that are available.

Additionally, a mobile app is available for Android™, iPhone® and iPad® users to access the complete catalog of Arcat products and more on-the-go. The app assists contractors in the productivity of the design-build process, from design to construction and facility management.

Information and resources can be found at www.liquidnails.com.

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