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The Talent Report

The labor shortage varies in intensity by market and by firm.

In July 2017, construction firms added 6,000 workers to reach 6,899,000 industry employees. It was the highest level of construction employment since 2008, capping a year of payroll growth at 2.8 percent a month. Job hires in construction have grown at twice the national average.


Good news, right? Well, the Associated General Contractors of America and many wall and ceiling industry executives have concerns.


“The low unemployment rates in construction and the overall economy suggest contractors are having difficulty filling positions,” says AGC Chief Economist Ken Simonson.


“Right now, the supply of labor is snug,” says Tim Wies, president of T.J. Wies Contracting Inc., Lake St. Louis, Mo. “We have enough carpenters, but we’re going to need to reload because the average age is getting up there.”


In other words, construction firms might hire more workers were it not for a tight labor market. And long-term the problem will only get worse.

How Bad Is It?

Building activity varies by market, and the severity of an area’s labor shortage goes through cycles. For this reason, labor availability varies widely among ceiling and wall contractors. Here’s what a few industry executives have to say.


So-so. “It’s good and it’s bad,” says Rob Aird, president of Robert A. Aird, Inc., Frederick, Md. Aird is overwhelmed by requests to bid projects, and he could handle more work if he had more qualified workers. Still, he can be choosy. Aird says he can select which projects to take on and which “to leave for low-price bidders.”


Panicky. “We took a call this morning from a GC in a panic,” says Brent Allen, vice president at Compass Construction, Dublin, Ohio. “They couldn’t find anyone to bid on their project.” What is Allen’s particular labor limitation? He says his firm is backlogged with work, but a shortage of carpenters “well versed in interior and exterior steel framing” is common in Central Ohio right now.


Distressing. John Hinson, division president at Marek Brothers Systems, Inc., Dallas, calls the labor shortage “a nightmare.” He says it’s hard to keep superintendents. And the firm has had to increase pay and bonus packages to remain competitive as an employer.


But, you’ve heard this before. Sufficiently trained craftspeople are often hard to find to fill staffing needs. The shortage of construction labor is a chronic problem. Research confirms this.


“Talent Development in the Construction Industry,” a report from FMI Corporation, says the percentage of firms facing a skilled labor shortage jumped from 53 percent in 2013 to 86 percent in 2015. This was expected at the time. Construction lost about 30 percent of its workforce during the Great Recession. And while building activity has rebounded, millions of workers have “left the workforce for good,” says the FMI report. FMI’s latest talent development survey shows the problem getting worse. The percentage of firms facing a talent shortage increased to 88 percent in 2017.


This isn’t news to some. Mike Holland, chief operating officer at Marek Brothers Systems, Inc., Houston, believes the talent shortage has been developing for decades.


“We have a three-decade demographic working against us,” he says.


While construction pays well, “comparatively speaking we’re not at the top,” Holland says. “We’re all paying more money than we were 20 years ago, but we’re getting less output.”


Holland believes worker’s skills and productivity capabilities have diminished. In part, this is due to talented people entering the workforce elsewhere, being lured by other industries.


“We’re not attracting young people on a broad scale,” says Sabine Hoover, content director at FMI Corporation. “We continue to underperform in describing a compelling career path for candidates. We fail to make wall and ceiling construction a fascinating place to work.”


Young people are easily fascinated by the technology being used in other industries. Tech promotion creates a decided advantage for their recruitment programs.


“They use robotics,” Holland says. “For many young people, that’s way ‘cooler’ than hanging [wallboard].”

New York and West Coast

To be sure, not all markets and contractors face talent shortages today.


Lee Zaretzky, president at Ronsco Inc., New York, N.Y., says he has a sufficient supply of workers in his region. He believes that area tradespeople want to work for Ronsco, and so he has little trouble finding help.


“Manning a job with a skilled and productive workforce has not been an issue, nor do we see it becoming one during this boom,” Zaretzky says.


John Rapaport, chief contracting officer and general counsel at Component Assembly Systems, Inc., Pelham, N.Y., says the labor shortage in New York City “is less apparent.” The New York City District Council of Carpenters has provided sufficient training and development of skilled labor, and has adopted a provisional recruiting arrangement applicable to residential projects. Whereas New York carpenters earn about $100 per hour with benefits, the provisional arrangement provides workers to signatory contractors at about $30 less per hour. Thus, the union supplies both skilled workers at union scale wages and provisional workers. This helps New York contractors to meet the cost constraints of multifamily residential projects while expanding the union labor force.


Out West, construction employment is growing, and that means lots of workers are heading to job sites.


“Western metro areas, from Southern California and Nevada to Oregon and Washington, logged many of the largest absolute and percentage increases in construction employment in the past year,” says AGC’s Simonson.

Microbursts of Shortage

Still, many industry firms see their work windows getting squeezed. This compression of the construction timeline makes it hard to staff projects.


Wies says end dates for projects remain fixed, but start dates for his crews are falling a month to six months behind. Instead of a normal staffing curve—a gradual ramp up, followed by a gradual ramp down—Wies has to swarm his projects with workers all at once.


“There’s no bell curve anymore,” Wies says. “Staffing goes straight up and straight down.”


Wies says it’s hard to work schedules frequently cut in half. He has to find, say, 50 people to staff jobs that might have only needed 20 total mechanics and finishers were there time to manage a more steady crew deployment. Wies has no choice but to over-man jobs to finish them on time. He points the finger at general contractors and the licensed trades.


“If the [licensed trades] people in front of us burn up two-thirds of the schedule when they should have only have half of the schedule, our window drops from 100 days to 60 days,” Wies says. “Coming up with a crew that fast creates these little microbursts of labor shortage.”

Near-term Solutions

So, what can firms do in markets where labor is tight and during market phases when labor is hard to find? Here are some short-term solutions that are helping a few industry firms.


Prefabrication. Aird focuses on the labor efficiencies gained through panelization and prefabrication. He also works with the Maryland Center for Construction Education and Innovation, a workforce intermediary helping high schoolers and members of the military transition to construction careers.


Right sizing. Rapaport says his firm addresses the tight labor market by “right sizing”—taking on an appropriate amount of projects, and staffing to meet that level of work.


“We’re finding balance in not taking on too much or not having enough work,” he says.


Precise ordering. Allen says Compass Construction orders materials accurately to help trim its man-hours. Where Compass might have ordered, say, standard 11-foot cold-formed steel studs and then cut them in the field, the firm now orders the exact stud lengths, say, 5 feet 6 inches. This eliminates field cuts and saves time. The firm does this, Allen says, even though the supplier adds an up-charge to such orders.


Project partnerships. Wies says his firm has teamed up with mechanical contractors on semi-prefabricated “pod” jobs in the medical sector. Labor savings come by being on the right team and by streaming the work process through coordination.


“If we get on a job early, the plumbing and electrical guys will help us when they see how we can resolve conflicts,” Wies says. “They can prefab pipe racks, and we can prefab head walls for hospitals.”


Specialty work. Holland says Marek is on the lookout for high-revenue specialty work.


“Drywall, acoustical ceilings and paint are commodity trades,” he says. “We’re trying to do trades that have a higher multiple of material to labor.”


The work he has in mind includes specialty ceilings, fabric wall panels, flooring and other types of interior product installations.


“We’re getting requests even on traditional scopes,” Holland says. “The GCs are saying, ‘Hey, Marek, will you carry this and that in your contract?’”

Long-term Effects

But short-term solutions will only go so far. The kind of changes needed at some firms may require a corporate overhaul.


For example, many observers of construction labor say that construction companies need to be more sophisticated in their approach to talent development. Firms, they say, should think beyond basic craft and leadership training. They need to make talent development a strategic function with someone in the C-suite running the program.


“Talent development today has become one of the top strategic priorities for many companies in our industry,” says FMI’s Hoover.


Specifically, a structured formal approach to talent development gets the best results. Craft training, leadership training and career development can advance a company’s workforce but also attract talent when it’s linked to business goals. In other words, the results of formal talent development programs need to be measurable.


“It enables firms to intentionally tie together skills, performance and training programs, which ultimately leads to better results in attracting and retaining people,” Hoover says.


Clearly, wall and ceiling firms will have to adapt.


“The pressure is so strong in today’s robust market that it’s forcing contractors to change the way they do things,” says Hoover.


A consensus in the industry recognizes that during the Great Recession many workers opted to attend college. Others took jobs elsewhere and permanently left construction.


“It’s time to stop signaling to students that their only path to success is paying for four years of college and hoping to land a rewarding office job,” said Stephen E. Sandherr, AGC’s chief executive officer. “Our educational systems should be exposing more students to the fact that our modern economy offers many different paths to successful and rewarding careers, including construction.”


Sources contacted for this article would agree. But, they see wall and ceiling firms having to fast-track some talent for now. A generation of craft workers will be foremen earlier in their careers than was true of prior generations. At the same time, they can get to doing what needs to be done.


“We’ve got to recruit,” says Wies. “The middle-age group of tradesmen is where we lost the most. We’re seeing a dearth in 30- to 40-year-olds.”


“Our strategy is attract, train and retain,” says Holland. “Generally speaking, I don’t think our industry has done that.”


So, is the tight labor market, while significant, fundamentally detrimental to ceiling and wall contracting companies? Allen says his company earns high margins right now, and it has over a year’s worth of project backlogs on the books. Holland says his firm is busy and its fees are good.


If you produce more with fewer workers, then bravo. You’ve have something workable in the current tight labor environment. But, if those crews are less productive, or if they’re cutting corners or working less safe today, somehow and some way, your costs are going to rise.


“Part of our revenue growth, quite frankly, is buoyed by a lack of productivity,” Holland admits. “It used to cost 10 cents to hang [drywall sheets], now it’s a quarter. Well, guess what? That makes my price higher—if I can pass it along.”


We’ll find out soon enough how it all plays out for the industry.

Mark L. Johnson writes regularly about construction labor trends. Reach him at @markjohnsoncomm, and at

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