The Labor Shortage: Nuisance or Catastrophe?

Ulf Wolf / October 2018

The bad news: Recently, according to the Job Openings and Labor Turnover Survey, the number of open U.S. construction sector jobs came in at 243,000. This widening gap between available positions and skilled workers ready to fill them continues to pour pressure on owners, developers, contractors and project managers.
    
The good news: Flying in the face of this worker shortage, construction work is booming, forcing companies to look to technology and elsewhere for solutions to shore up operations, increase efficiency and do more with less.
    
The sobering news: Unless this industry-wide labor shortage—now affecting all trades—is addressed at root level and resolved long-term, no matter how many developers are willing to invest how many billions in new construction, sheer lack of execution will let the wind out of the construction sails and bring about another downturn.

Current Climate
How is the current labor shortage affecting AWCI member contractors, and how are they dealing with it?
    
Admits Gilly Turgeon, president of Green Mountain Drywall Co., Inc. in Vermont, “The labor shortage is definitely a problem. We deal with it by only taking on work we can perform with existing manpower.”
    
Observes Timothy Rogan, vice president of Houston Lath & Plaster in Texas, “From what I see, talk of labor shortages comes mostly from very large companies used to high volumes of work with hundreds or thousands of men on the payroll. There is manpower out there, but it’s unavailable to contractors because people now, more than ever, are running their own businesses, even if it’s just one-man operations.”
    
According to Robert Aird, president of Robert A. Aird, Inc. in Maryland, “Finding workers in our trade—not to mention qualified and experienced ones—has been a challenge for at least six years. At this point we offer cash incentives to our employees for anyone they bring on board who stays at least three months.”
    
Adds Matthew Townsend, president of OCP Contractors in Ohio, “To protect our earned customer reputation and to meet their high expectations, we are forced to cap the amount of work we take on. I believe this will become the norm and that the labor shortage will make contractors align with their preferred CMs and GCs.”
    
“The shortage of labor,” says Randy Schneewind, president of Berg Drywall, LLC in Minnesota, “has made us fall behind on some projects and work overtime—eroding our margins—on others.”
    
And Craig Daley, president of Daley’s Drywall & Taping in Northern California, says, “We see a shortage of qualified journeypersons. The union halls are bare and anyone of talent already has a job.
    
“Our best recruiting pool is our non-union competitors, as union wages are more attractive. Also, our employees are our best recruiters—they spread the word in their communities that we pay more and have steady work.”
    
John Kirk, owner of Kirk Builders, also in Northern California adds, “For me, finding manpower is not the major problem; however, the attitude and work ethic of jaded journeymen, who know they can easily find work elsewhere in the event I become unhappy with them, is.”
    
Shares Robert Coyle, operations manager/vice president at Dayton Walls & Ceilings, Inc. in Ohio: “We are definitely affected and have to stay aware of upcoming manpower needs and what impact a potential project will have, even before we commit to bidding. Also, we now put expiration dates on our bids.”
    
Says Pat Arrington, principal at Commercial Enterprises, Inc. in New Mexico: “We display current and future projects on a clearly visible 8' x 4' board so applicants who come in to fill out paperwork see we have work for several years. They are like all of us, wanting to know there is future work.
    
“Also, we take good care of our employees and they know it—especially those who have been with us for years.”
    
Jerry Smith, president of Baker Drywall Austin, Ltd. in Texas (and also president of the Association of the Wall and Ceiling Industry), says, “The lack of manpower has had a huge impact on the amount of work/volume that we can take on. We have had to make sure our manpower matches our volume of work. Bottom line: Do not oversell your manpower.”
    
Observes Dave DeHorn, chief estimator at Brady Company/Los Angeles, Inc. in California, “We’re starting to feel the pinch, but being a union shop helps because we pull our labor from the local unions, though they are also stretched thin now.”
    
“It’s affecting us quite a bit,” says Greg Smith, executive vice president at Superior Wall Systems in California, “and not only us but the industry as a whole. We have trouble finding qualified people to work in the field, and this diluted talent-pool breeds diminishing returns, since we have to bid work at production rates that new hires may not be able to meet.
    
“All companies have a core group of employees that take ownership of their work, and that translates directly to a good bottom line. When we are forced to work with a large influx of new hires, we lose experience and production rates.
    
“The GCs are facing similar shortages: As a result, people on their side are promoted faster than they should be, resulting in projects that are not managed efficiently.
    
“The other trades, too, are dealing with labor shortages resulting in a slowdown with in-wall trades like mechanical, electrical and plumbing, which has a detrimental effect on the overall project schedule.
    
“Lastly, our material distributors are in the same boat. While the supply of materials is not an issue, getting those materials to the site is.
    
“None of this comes as a surprise to anyone at this point: As an industry we are doing our best to manage this with our trade partners and clients.”
    
Mike Holland, chief operating officer of Marek Brothers Systems, Inc. in Texas, says the labor shortage is “already constricting our ability to pursue work and meet revenue targets. Due to our workforce demographic, we are losing skilled, experienced workers faster than we can replace them.
    
“Immigration issues, industry perception issues and poor industry efforts in recruitment, skills training and in clearly outlining a career path over the last few decades are now coming home to roost.”

Long-Term Forecast
How is the predicted longer-term labor shortage affecting our members, and how are ceiling and wall contractors preparing for it?
    
Says Schneewind, “The labor shortage has made us a business that employees want to be part of, and we rely on our team to attract new hires.”
    
“It forces me to focus on labor development,” says Kirk. “And on finding new apprentices, spotting those who will make it, and training them.”
    
Coyle is keeping his company’s volume under control. “It is better to say no to a project than to underperform,” he says.    “We are also looking at more creative ways to expand and improve our field crews through recruiting bonuses and by improving our training program.”
    
Arrington’s company is preparing by “recruiting apprentices—placing them with journeymen—and in a few weeks, they can hang and screw off gypsum boards.”
    
He adds, “We pay our apprentices 50 percent of JM pay for 6 months, then we increase their pay. Some people think apprenticeships mean you can boost your profits by paying lower wages, but due to the training and development process, we actually incur extra cost with this program. That said, in the end we have created leadership-quality people: 90 percent of our superintendents have gone through apprentice training.”
    
Jerry Smith’s company is now more aware of its manpower count. He says they are also trying to be creative in finding manpower.
    
DeHorn says, “We are running a pretty constant manpower load in the field. Our estimating department is looking for projects that fit into our backlog valleys while not building mountains.
    
“Everyone wants to work. So, if you can keep your core group going from job to job, they tend to stick with you. You need a good, even backlog to accomplish this.”
    
Greg Smith’s company is taking a closer look at production rates, time frames and margins. “We started stockpiling field personnel about 12 months ago in preparation for this,” he says, “and consequently have not been hit as hard as we could have been.
    
“We are taking a very pragmatic approach to how much work we want to bring in. It’s like a feast out there right now, as compared to the famine we experienced just a few years ago, but we have to be very careful how much we put on our plates.”
    
Holland says, “Ten years ago, we started a formal workforce development program at Marek that was aimed at ensuring the perpetuation of our most vital resource—our people, especially our craft professionals. Still, even after this 10-year focus on recruit, train and retain, we are evolving and learning how much there is still to be done.
    
“One of the most impactful things we’ve learned is the need to collaborate with other areas of our industry in workforce development. We didn’t bring this situation about by ourselves, and we won’t resolve it by ourselves. Certainly, we are each responsible for our own firm’s performance and practices, but we are measured collectively as an industry by those deciding whether or not to enter our workforce.”

Manufacturers
How can manufacturers help alleviate the labor shortage?
    
Quips Turgeon, “If they made robots to install and finish drywall, I would buy 20 of them.”
    
“Manufacturers are already helping,” notes Townsend, “by finding better, faster ways to install their products. They are also starting to combine processes to eliminate labor in the field.”
    
Daley says, “Anything that reduces labor hours will help overcome the labor shortage, such as lighter weight boards, prefinished materials, automatic layout and mechanical installer-assistance (think robot).”
    
Kirk believes manufacturers have already done a lot. “For instance,” he says, “prefabricated box headers shave 90 percent off labor time compared with field-built box headers. I think they’re great, but I don’t see them used by other companies too often.
    
“A true innovation would be a joint compound that works as a single finishing coat, but good luck with that.”
    
Shares Coyle: “We utilize new tools and innovative materials more than we did before. The risk of a product/tool not working out is now worth taking. We use panel lifts, collated screws and cordless everything in an attempt to improve the production of less-experienced workers.”
    
Suggests DeHorn, “Manufacturers can make their products safer to use. This would cut down on injuries and lost work-time.”
    
Holland’s view is that “the manufacturing community is reacting to the workforce problem with innovation of its own aimed at material, equipment and tools that minimize unnecessary labor and streamline the construction process.”

Other Factors
How can other fields and factors—such as schools, politicians, technology, training, leadership, panelizing (assembling prefabricated sections of walls, floors or roofs at the building site), etc.—help alleviate labor shortage?
    
Turgeon says, “Schools can help by not shaming kids into believing they have to go to college. And bring back the wood-working classes. Architects could design buildings that are easier to build.
    
“Panelizing is all well and good until the first section of steel is set wrong, then the rest of the project falls apart. It all starts with having a good, full set of plans with accurate details.”
    
Aird says, “We are involved with several organizations, such as MCCEI (Maryland Center for Construction Education and Innovation) that are actively focused on alleviating the labor shortage.
    
“Another great program is the ACE Mentor Program (Architecture, Construction, Engineering), a nationwide, high-school mentorship program that aims to inspire students to explore careers in construction.”
    
“Stop telling every student that they must go to college,” says Townsend. “Increase their awareness about opportunities in the trades, which provide for a great middle-class living.
    
“In construction, apprentices are paid on the job, are educated for free, and don’t incur crippling student-loan debt like college grads. Plus, this really is a great career path.
    
“As for other factors, I think AR (augmented reality) and BIM (Building Information Modeling) will soon allow both skilled and (potentially) unskilled workers to work faster, smarter, more efficiently and with smaller crews.
    
“This is also true of panelization, which greatly reduces the number of workers required on the project, reduces the need for scaffolding, requires fewer passes of multiple trades working the exterior and, most importantly, reduces the risks of injury—it’s safer.”
    
Adds Schneewind, “Make everyone aware how much the trades are paying in salaries to increase the interest among younger folks entering the work force.
    
“As for panelizing, we know it takes less labor hours to assemble a wall in a factory than it does in the field, reducing the number of hours needed. However, the shortage of trucking labor is adversely affecting the savings of the factory framing.”
    
Observes Kirk, “Some years ago, the cost of a project was about 90 percent material and 10 percent labor. That has been reversed completely thanks to new technology. Lasers are a lot faster than plumb bobs and water levels. Automatic and semi-automatic pop guns (powder-actuated tools) are a lot faster than single-feed pop guns. Automatic taping-tools have been available for many years.”
    
Suggests Coyle, “Stop pushing high school students into higher education whether suited for it or not.
    
“Also, we need to lobby for tech-supports schools that fill the needs of the U.S. economy, similar to what is now being done in the healthcare industry; their nurse-training programs are leaps and bounds ahead of the game.”
    
Jerry Smith concurs: “High schools need to get back to thinking that not all students are going to college; they need to reintroduce trade classes to their curriculum.
    
“Also, we as contractors need to go out and educate the public about our trade and the great opportunity to make a decent living that it offers.
    
“When it comes to panelizing, we have found it easier to find manpower to work in a factory setting with controlled temperatures. Also, we are attracting a different skill set when we hire for prefabrication in a factory environment. And a controlled environment allows us to monitor quality more efficiently.”
    
DeHorn concurs, “Schools must inform their students that trade workers are needed in the future.”
    
“Panelizing works well if you have a repetitious project. However, the work we see in commercial construction is not all that repetitious. Still, we are able to pre-fabricate certain items such as jamb studs, headers, certain soffit drops, roof mansard framing, etc. By doing this off-site in a controlled environment, we have access to a better-quality product that is produced faster. A smaller, on-site crew can then install these items faster than having to build them on site.”
    
Greg Smith says, “I sure would like to see a resurgence in high schools teaching more shop classes and R.O.P. (Regional Occupational Program) preparing more kids for the trades.
    
“Panelizing and prefabrication are something that can definitely help. The more work done before hitting the site, the better off we are, and it does take a lot of pressure off the project schedule. The only downside is that you do need a sizable place to store the prefabricated materials while you wait for the project to be ready for them.”
    
Holland suggests, “It boils down to leadership, leadership, leadership—much like safety and its transformation, the workforce issue must be addressed from the top of an organization, and currently there is not nearly enough comprehension of the depth of our problem and the complex issues we are facing. It will take time for leadership to involve itself in the game, and until then, progress will be slow.”

Future Innovations
What future innovations or directions do contractors predict or foresee that might lessen the need for construction labor?
    
“Prefabrication,” says Townsend. “It is the future, aligned with AR, BIM and other advancing technologies.”
    
Adds Schneewind, “Robotics, pre-finished wall panels, 3D printing.”
    
Suggests Daley, “As BIM design moves toward artificial intelligence, metal studs and drywall sheets can be shipped precut-to-size, including all penetrations—where to place the studs and sheets will be easy to follow with the use of AI headsets, saving a ton of time with jobsite layout, cutting and fitting.”
    
DeHorn says, “Robots, drones and continued improvement on materials will definitely have an impact on our future labor. We are seeing robots that can go around the interior of the job site at night and scan the walls to see how much of a product has been installed. The next day that information is checked against the schedule to make sure the job is moving in the right direction.
    
“Drones are already used to do inspections, among other things, for areas of the building that are difficult to reach. The faster we can pass inspections, the faster buildings are completed.”
    
Adds Greg Smith, “I think prefabrication will have the largest effect on reducing on-site labor in the future.”
    
Suggests Holland, “Exoskeletons? Robots? Who knows? However, if we do not improve the design process, and with it the planning and sequencing of a construction project, then any advancement in robotics, etc. will go largely unrecognized in construction due to our current rather chaotic process.”

Other Thoughts
“We have always had shortages,” says Townsend, “and, hopefully, always will. When we are not short on labor, we are in a contracting economy, which is less fun.”
    
Daley says, “We need to improve the immigration process and make it easier for hard working law-abiding immigrants to work legally, pay taxes and participate in the social security program they contribute to. Why not a simple registration when you cross a border that takes your info and lets the government track whether you are working and paying taxes? If not, the registration expires and you are sent home. Simple, legal.”
    
Offers Coyle, “With over 43 years in the drywall business and growing up in a family that had 42 drywall finishers at one time, I have witnessed many trends. The current industry trend that really scares me is self-performing GCs. They are taking a very specialized trade and generalizing the employees. If this trend goes unchecked, the specialty training that we provide our mechanics will be a thing of the past.
    
“A self-performing GC will not be able to send their employees to the AWCI’s Doing it Right training, because they could be pouring concrete one day, drywall next week and casework the next. It is just not possible to be a jack-of-all-trades while maintaining good quality. These GCs have no concern for the industry, and with the self-performing GC pirating employees from subcontractors, I doubt our ongoing investment in employee training will continue.
    
“We must establish a legally binding way to retain our employees before we take on a person with zero knowledge of the metal stud and drywall industry and train him to possibly becoming a future president of the AWCI.”
    
Jerry Smith says, “We, as contractors, have to continue to be open minded and creative to convince potential new-hires to join our teams. The bottom line is that we have to use whatever productive means and methods it takes to ensure that we have a work force available to do the work—or don’t take it on.”

California-based Ulf Wolf is the senior writer at Words & Images.