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
| Oct 6, 2011
GREENBUILD 2011: Growing green building market supports 661,000 green jobs in the U.S.
Green jobs are already an important part of the construction labor workforce, and signs are that they will become industry standard.
| Oct 6, 2011
GREENBUILD 2011: Dow Corning features new silicone weather barrier sealant
Modular Design Architecture >Dow Corning 758 sealant used in GreenZone modular high-performance medical facility.
| Oct 6, 2011
GREENBUILD 2011: NEXT Living EcoSuite showcased
Tridel teams up with Cisco and Control4 to unveil the future of green condo living in Canada.
| Oct 6, 2011
GREENBUILD 2011: Kingspan Insulated Panels spotlights first-of-its-kind Environmental Product Declaration
Updates to Path to NetZero.
| Oct 5, 2011
GREENBUILD 2011: Johnson Controls announces Panoptix, a new approach to building efficiency
Panoptix combines latest technology, new business model and industry-leading expertise to make building efficiency easier and more accessible to a broader market.
| Oct 5, 2011
GREENBUILD 2011: Software an architectural game changer
Interactive modeling software transforms the designbuild process.
| Oct 5, 2011
GREENBUILD 2011: Tile manufacturer attains third-party certification for waste recycling processes
Crossville has joined with TOTO to recycle that company’s pre-consumer fired sanitary ware.
| Oct 5, 2011
GREENBUILD 2011: Sustainable construction should stress durability as well as energy efficiency
There is now a call for making enhanced resilience of a building’s structure to natural and man-made disasters the first consideration of a green building.
| Oct 5, 2011
GREENBUILD 2011: Solar PV canopy system expanded for architectural market
Turnkey systems create an aesthetic architectural power plant.
| Oct 5, 2011
GREENBUILD 2011: Kohler builds sustainable booth at Greenbuild 2011
In a setting composed of reclaimed materials, biodegradable signage, energy-efficient lighting and more, exhibitor highlights its new products with ecological awareness.