Commercial Construction Trends - Continued Labor Shortages, Offsite Construction
Continued Labor Shortages
Ever since the construction industry started recovering from the Great Recession, it has dealt with labor shortages throughout areas of the country. This is expected to continue in 2018 as firms struggle to find enough skilled craft workers to meet the growing demand in order to keep pace with the increase in construction spending and starts expected this year.
The construction industry added 210,000 jobs in 2017, with 30,000 of those, mostly specialty trade contractors, being added in December. This is up from the 155,000 added in 2016 but still down from the 336,000 added back in 2015.
A recent survey by the Associated General Contractors of America (AGC) shows that 75% of firms surveyed are planning to add headcount in 2018. That’s good news, except when you consider that 78% of firms are currently having a hard time filling skilled labor positions and 82% of firms expect it to remain difficult or become harder to do so.
With the recent reduction in the corporate tax rate, it will be interesting to see if construction firms invest those savings into creating training programs to lure more workers to the industry or by increasing wages to attract more workers.
Offsite construction, both modular and prefabrication, is a construction method that got a lot of hype a few years ago but interest appeared to be waning. That doesn’t seem to be the case anymore as a renewed interest in both prefab and modular construction is growing.
For most clients of offsite construction, the big draw is the condensed construction schedule. Building in a controlled environment in an assembly-line fashion means no weather delays and creates a safer environment for workers since it eliminates having workers at height, eliminating many of the fall hazards common on traditional construction sites.
Last year, hotel giant Marriott committed to having 13% of their hotels built this year using modular construction. That means that 50 of the hotel deals Marriott expects to sign this year will be built with prefabricated modular guestrooms or bathrooms.
Another great example of the renewed interest in offsite construction is Katerra, a start-up formed in 2015 and already valued at over $1 billion. They handle design, material sourcing and supply, prefabrication and onsite construction of a project.
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