In the last year, Kalamazoo-based construction manager CSM Group Inc. has hired an in-house recruiter as part of its human resources team.
The move came as a direct result of the firm’s struggle to find qualified talent, a trend that construction companies are experiencing nationwide.
“We’ve hired our own recruiter as part of our HR team to make sure we can have a constant pipeline and that we’re getting the best fit for our culture as we possibly can,” said Todd McDonald, principal and COO of CSM Group.
National findings from the Associated General Contractors of America show the number of unemployed job seekers with construction experience has reached record lows in the last couple of months. In October, industry employment gains slowed to 2 percent, but still well outpaced the 1.4 percent growth in overall non-farm employment, according to a recent AGC report, which noted average hourly earnings in construction also rose 2.4 percent on a year-over-year basis.
Across the region, construction employment grew in four out of the six metro areas. Kalamazoo-Portage and Muskegon led the gains with 8-percent growth each, followed by Lansing-East Lansing at 2 percent and Grand Rapids-Wyoming at 0.4 percent. The construction industry in Battle Creek and Niles-Benton Harbor remained flat.
Statewide, employment in the construction industry stood at 172,800 people, still 19 percent off its prior peak in April 2000.
“Even though construction firms in over two-thirds of the nation’s metro areas were able to add employees in the last year, our survey suggests employers in still more locations would have done so if they could find more qualified workers to hire,” AGC Chief Economist Ken Simonson said in a statement. “Job openings at construction (firms) have been at record levels in recent months, showing that contractors are still eager to hire.”
Addressing talent needs
Eighty-one percent of Midwest firms surveyed by AGC reported having a hard time finding qualified workers to hire.
Local firms are still struggling, but remain optimistic about the future because of initiatives created to begin recruiting workers for the construction trades starting at a young age, said Josh Szymanski, chief strategy officer at Owen-Ames-Kimball Co. in Grand Rapids.
“There’s a lot of work being done in that space; it just takes time to develop it,” Szymanski said. “These programs ramped up five, six, seven years ago. We’re just seeing those kids come up now, so there’s a good crop of kids coming through the trade schools and colleges. It just takes time to turn the ship.”
Firms have put more resources into working with community colleges and trade programs, as well as local groups such as the AGC of Michigan and the West Michigan chapter of the Associated Builders and Contractors (ABC) that are focusing on these issues.
In the meantime, contractors have adjusted their timelines and learned to plan ahead.
At Grand Rapids-based Rockford Construction Co. Inc., leaders have started focusing 12-18 months out in planning for projects. Usually they would begin planning between six and 12 months ahead of time, said Shane Napper, president of construction at Rockford Construction.
“We also are having a lot more conversations with our trade contractors about what their forecasting looks like,” Napper said.
That communication helps to ensure companies have enough people and materials to get projects done, he added.
For CSM, the new realities of the industry have led to working during non-traditional times for some clients.
“We do a fair amount of work in the K-12 market, and we have to create opportunities to work during the school year because the summers are continuing to be shorter for most school districts. With a shortage of labor, it’s a challenge to cram that much work into a short period of time,” McDonald said.
Because of this early planning, firms have strong backlogs going into 2020 and even 2021, but a presidential election year brings about political uncertainties regarding change and the economy. As such, the 2020 election might cause a little bit of a slowdown in companies’ willingness to take on projects, construction executives told MiBiz.
Change breeds uncertainty
According to AGC data, construction spending decreased 2 percent year over year in September 2019. The trade group said demand for construction is being undermined by uncertainty and tariffs that are part of a series of trade disputes with China, the European Union and other countries.
Tariffs moved to the forefront of conversations in the construction industry during and after the last election cycle. Changes proposed by whichever candidate wins the next presidential election could cause some clients to put off building until they know how changes will be implemented, Napper said.
“No matter which party, people like to come in and propose change. A lot of times when those changes are proposed, they have a possibility of affecting construction as far as material pricing and interest rates,” Napper said. “People try to wait until they understand what the proposed changes are going to be and how they will be implemented.”
At CSM Group, McDonald predicted 2020 and 2021 will be flat years for construction, which could be a positive for the industry and allow it to catch up on the talent shortage.
“We’re losing way more jobs on a monthly basis to retirement and people aging out versus putting people back into those positions,” he said. “Even if the building side of things tends to slow, we’re still going to have strains on the labor market.”
Szymanski has not seen a slowdown in the work that Owen-Ames-Kimball specializes in, including government, airport, hospitals and schools. He said some industry leaders remain concerned about the multifamily residential and industrial markets.
“But we’ve got a strong backlog through the middle of next year, and we really know most of the work that’s coming through in 2021,” he said.
McDonald echoed those sentiments, noting he is also keeping an eye on construction costs, which have continued to increase, although less so in recent months.
“For people trying to decide whether they are going to build, they might tend to slow on their decisions a little bit,” he said.
EDITOR’S NOTE: This story has been updated to note that Todd McDonald’s title is president and COO at CSM Group.
News coverage in the real estate and development section of MiBiz is made possible by advertising support from Rockford Construction Co. Inc. Rockford is a nationally recognized construction, real estate development and property management provider, serving West Michigan and beyond for more than 30 years. This advertisement has no effect on editorial consideration in MiBiz.