(IND) Construction Firms Plan to Hire in 2014, Worry About Worker Shortages

Most construction contractors predict that the demand for construction services will either grow or remain stable in virtually every market segment this year, and many firms plan to start hiring again, according to AGC’s recently released survey results conducted as part of Optimism Returns: The 2014 Construction Industry Hiring and Business Outlook.  The survey results reflect a generally upbeat outlook for the year, even as firms worry about growing worker shortages, rising costs, and the impact of new regulations and federal budget cutting.

According to the results, many firms plan to begin hiring again, while relatively few plan to start making layoffs. Contractors have a relatively positive outlook for virtually all 11 market segments covered in the Outlook, in particular for private-sector segments. For five of those segments, at least 40 percent of respondents expect the market to expand and fewer than 20 percent expect the market to decline in 2014. The difference between the optimists and pessimists – the net positive reading – is a strong 28 percent for private office, manufacturing and the combined retail/warehouse/lodging segments, and 25 percent for power and hospital/higher education construction.

Among public sector segments, contractors are more optimistic about demand for new water and sewer construction, with a net positive of 17 percent. Contractors are mildly optimistic about the market for highway construction, with a net positive of 10 percent. Respondents are almost equally divided regarding the outlook for the other four segments, ranging from net positives of 5 percent for public buildings, 4 percent for schools, 3 percent for transportation facilities other than highways, to a negative of 2 percent for marine construction.

Ninety percent of construction firms report they expect prices for key construction materials to increase in 2014. Most, however, expect those increases will be relatively modest, with 43 percent reporting they expect the increases to range between 1 and 5 percent. Meanwhile, 82 percent of firms report they expect the cost of providing health care insurance for their employees will increase in 2014. Despite that, only 1 percent of firms report they plan to reduce the amount of health care coverage they provide.

AGC’s chief economist, Ken Simonson, notes that as firms continue to slowly expand their payrolls, they are likely to have a harder time finding enough skilled construction workers. Already, 62 percent of responding firms report having a difficult time filling key professional and craft worker positions.  Two-thirds of firms expect it will either become harder or remain as difficult to fill professional positions and 74 percent say it will get harder, or remain as hard, to fill craft worker positions.

According to Simonson, the worker shortages are already having an impact on the industry. Fifty-two percent of firms report they are losing construction professionals to other firms or industries and 55 percent report they are losing craft workers. As a result, a majority of firms report they have improved pay and benefits to help retain qualified staff. One reason they are likely worried is that nearly half of the firms believe training programs for new craft workers are poor or below average.

The Outlook was based on survey results from over 800 construction firms from every state and the District of Columbia.  Contractors of every size answered over 40 questions about their hiring, equipment purchasing and business plans. Click here for the full report.  Click here for the survey results.  Click here for state-by-state survey results.

Source: AGC of America