Contractors expect growth in 2018 – along with worsening labor shortage

Updated Jan 7, 2018

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Anticipating that the economy will be better than last year for the industry, a majority of construction firms plan to expand their payrolls in 2018. But their optimism is tempered by concern over a growing shortage of skilled workers.

That’s according to a survey released today by Associated General Contractors of America and Sage Construction and Real Estate, which surveyed more than 1,000 firms nationwide.

“Construction firms appear to be very optimistic about 2018 as they expect demand for all types of construction services to continue to expand,” says Stephen E. Sandherr, the association’s CEO.

Three quarters of construction firms that were surveyed say they plan to expand their payrolls in 2018 because they believe economic conditions will remain strong as tax rates and regulatory burdens fall.

“This optimism applies to both private and public-sector construction demand, perhaps reflecting current economic conditions and increasingly more business-friendly regulatory environment and expectations that the Trump Administration will finally deliver on its promise to boost infrastructure investments,” Sandherr says.

But even as contractors plan to increase their head counts, according to the survey, there are hurdles.

“Despite the overall optimistic outlook, the construction industry faces a number of significant challenges this year,” the CEO points out. “Top among those challenges are the growing workforce challenges that have made it difficult for the vast majority of firms to find and hire qualified workers.”

An overwhelming majority of firms surveyed – 82 percent – said they expect it will either remain difficult or even become harder to recruit and hire qualified workers in 2018.  That’s up from 76 percent of firms that expected that challenge last year.


For 78 percent of firms, skilled labor needed

The survey reports that 78 percent of firms report they are currently having a hard time finding qualified workers to hire – compared to 73 percent at the beginning of 2017.

“Even as they cope with worker shortages, firms continue to be worried about how decisions made in Washington, as well as in state capitols, are impacting their operations,” Sandherr said in a conference call with editors.

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“And despite strong demand, competition for workers poses challenges to firms’ bottom lines.”

The deepening shortage in skilled operators, mechanics, carpenters and other workers has spurred the industry to step up efforts to recruit potential workers, even while they’re still in high school, and to offer training programs.

For example, the Nevada chapter of Associated General Contractors of America is now in the preconstruction phase for a 1,200-square-foot classroom that will feature Caterpillar’s newly released Large Wheel Loader Simulator System as a tool to enable students to get a realistic training experience.


Using technology to address worker shortages

Officials with Sage say that firms appear to be embracing information technology to help address workforce shortages and tight competition.

“Increased competition for projects is driving contractors to advance their use of not only building information modeling, but cloud technologies,” says Jon Witty, vice president and general manager for Sage Construction and Real Estate, North America.

“This is particularly evident in the use of cloud-based mobile solutions on the job sites, where contractors are using mobile software for daily field reports, field access to customer and job information, employee time tracking and approval and the sharing of drawings, photos and documents.”

Half of all the firms surveyed say they currently spend one percent or more of their revenue on information technology, up from 47 percent reporting that a year ago.

And now, 43 percent of respondents report they will increase their information technology investments in 2018 compared to the last year.


Industry efforts in the new year

Sandherr says the association will continue to lead efforts to encourage new federal, state and local measures to rebuild the pipeline for recruiting and preparing the next generation of construction professionals.

The association remains committed to working with the Trump Administration officials to help identify regulations that can be improved and others that can be removed.

“In other words, as long as federal officials continue to work to boost infrastructure investments, reduce regulations and support workforce development,” Sandherr says, “2018 will be a strong year for the construction industry.”


A bright outlook on 2018 economy

Ken Simonson, chief economist at The Associated General Contractors of America, reports that 53 percent of firms surveyed expect growth and only nine percent expect a decrease.

That equates to a “net positive reading” for all types of construction hitting 44 percent ­–  the highest yet recorded in the decade in which the surveys have asked contractors about their outlook, according to Simonson.

Contractors are most optimistic about the private office market segment, with a 22 percent net positive reading.

For further details on the segments, as well as state-by-state numbers, see the reportExpecting Growth to Continue: The 2018 Construction Industry Hiring and Business Outlook.