Gilbane Building Company announced the Summer 2014 edition of its in-house economics report, Building for the Future — Construction Economics: Market Conditions in Construction. The report predicts rapid growth coupled with the lack of skilled, experienced labor and the ability to meet schedule will be some of the most important industry issues to address over the next few years.
“The good, if not, great news is that the most favorable, forward-looking conditions support expectations for strong industry growth in 2015,” said Ed Zarenski, a Gilbane estimating executive with more than 40 years in the construction business. “Very active markets will drive escalation to climb more rapidly than we have seen in six years.
“The challenge of anticipated workforce shortages will have a detrimental effect on labor cost, productivity, the ability to readily increase construction volume and the ability to complete projects on time," Zarenski added.
While construction spending for 2014 will finish the year 5.5% higher than 2013 and the unemployment rate in construction is down to 7.5%, the industry has been losing workers for more than five years, falling to low points in the third quarters of both 2012 and 2013.
Going forward, as the workload expands rapidly, the significant shortage of available skilled workers, as well as management-level personnel, will impact productivity and force extended work schedules. The report notes total construction spending will increase 7% for 2015, which is a good sign for future hiring, but highlights the need for workers to have the right training and skills.
Other report highlights include:
-
The workforce has never grown as fast as what will be needed to accommodate the rate of new construction growth predicted. Rapid workforce expansion leads to productivity losses.
-
Construction jobs are up 600,000, or 11% from the low point. However, new jobs plus added hours worked for the entire labor force shows total labor is up 18%. That means 40% of the total gains in labor in the past three years is due to added hours, not new jobs. That is the equivalent of nearly 400,000 jobs.
-
The average annual rate of new nonresidential construction starts for the most recent four months is $197 billion. The average for the same four months one year ago was $146 billion. It is expected to be higher in the next four months. This large increase in starts will result in a rapid increase in nonresidential buildings spending growth in the second half 2014 through 2015.
-
Residential construction will increase 12% in 2015, but non-building infrastructure will decrease 5%. Nonresidential buildings spending will grow 11%, led by commercial and office construction, both expected to be up 15% in 2015.
The report is available here.
Related Stories
| Sep 28, 2012
Seattle is home to first LEED-certified modular radiation center
By using modular construction and strategic site design, RAD Medical Systems built the first radiation center to receive LEED certification.
| Sep 26, 2012
EDITORIAL OPPORTUNITY – BD+C Greenbuild 2012 Issue
Your firm is invited to contribute to this special issue, which will be distributed at Greenbuild San Francisco, Nov. 14-16, 2012.
| Sep 24, 2012
Reed Construction completes Lafarge headquarters in Chicago
Reed Construction was contracted to complete the full third floor build-out which included the construction of new open area work space, private offices, four conference rooms with videoconferencing capabilities and an executive conference boardroom.
| Sep 24, 2012
Chicago Lakeside shortlisted for the Sustainia Award
The “Lakeside Idea” is about bridging a brownfield industrial past to a green lifestyle future, from steel mill to innovation mill.
| Sep 24, 2012
$3.8-million athletic field and track opens in Glen Head, N.Y.
The complex also includes a new, one-story, multi-purpose building that serves as the main entry port to the athletic facilities.
| Sep 21, 2012
AAMA and WDMA release updated review and forecast that predicts industry trends
Significant volume is expected to return to the entry and interior door market as new construction demand is expected to grow at double-digit rates, outpacing remodeling and replacement activity as the housing market recovers.
| Sep 20, 2012
Mid-box retail study shows lack of available sites in Chicago
Existing supply is tight everywhere and almost non-existent in the most attractive zones.
| Sep 20, 2012
Forrester begins construction of freestanding cancer center in Montgomery County, Md.
The new 51,000-square-foot building will include two linear accelerator vaults for radiation equipment.
| Sep 19, 2012
Modular, LEED-Gold Certified Dormitory Accommodates Appalachian State University Growth
By using modular construction, the university was able to open a dorm a full year earlier than a similar dorm built at the same time with traditional construction.
| Sep 19, 2012
ABI back into positive territory
South continues to lead regions in demand for design services.