Idle lands

Could we have a construction worker shortage with 10% unemployment? [From our print edition featured in Monday's City Paper]

Email | Print By Kyle Swenson

Even almost two years into this recession, September was a bad month for the construction industry.

After hope-inducing drops in the pace of job losses over the summer and chatter that the downturn is finally winding down, the U.S. Department of Labor early this month put a damper on any hopes of a quick recovery. According to its gloomy figures, 64,000 construction jobs were shed last month, lifting to almost 1 million the total number of construction industry jobs that have vanished since September of 2008. Since the end of 2006, the industry’s unemployment rate has risen from 6.9 percent to more than 17 percent.

In Nashville, the damage done has not been as severe as elsewhere — the region’s construction sector has shed fewer than 6,000 jobs in the past year — but the effects are still significant. Contractors say the building drought has forced many of them to reduce their crews, leaving a large number of industry professionals out of work.

“Most everyone we deal with has had to cut back and cut their margins,” said Ty Osman, president of Solomon Builders Inc. “You just have to readjust. It’s not fun and it’s not pleasant. It’s just what’s got to happen to be able to make it through.”

As construction firms across town alter the way they do business, everyone is nervously awaiting the time when building begins again. Most are understandably eager for the lifeline new contracts will bring, but some also are fretting about just where they will find the skilled labor to compete for those jobs.

As fanciful as it might sound with the national jobless rate knocking on the door of 10 percent — and expected to stay there for most of 2010 — there is a real chance the construction sector will have to wrestle with a labor shortage once demand returns in a meaningful way.

If it happens, it will be caused by a combination of a relatively mobile labor force, the exit — voluntarily or forced — of many of the most experienced workers in the business and a general lack of properly qualified talent making its way into a business that calls for more technological savvy than ever before.

Some contractors worry an extended recession — while the residential market is bottoming out, the consensus has commercial construction getting a lot worse before it gets better — could seriously reduce the labor pool, forcing an already aging and now-frustrated population to retire, move to other areas of the country or venture into other fields of work.

“The construction industry sometimes ebbs and flows. If there’s not construction or a job going on, and [workers] are coming off a two-year job, they might go and find employment somewhere else,” said Ryan Peebles, the president of the local chapter of the Associated Builders and Contractors.

Many construction insiders say the local work force should be able to ramp back up once the demand comes — after all, supply overshot natural demand by a good bit during the boom years. But they admit they’ve been forced to rethink how they staff for the future and have also had to re-examine the type of work they pursue today to keep at least portions of their teams busy.

“A lot of subcontractors have gone out of business, and the ones that have been around a long time certainly have reduced their labor force significantly,” said Phil Pace, president of the Conseco Group Inc. “The bottom line is, when things do pick up, there’ll be a shortage.”

Coping now, planning for later

The main problem facing contractors today is the struggle to keep their labor force as busy as possible while waiting out the stalled building market. With limited contracts up for grabs and competition fierce, only a sliver of the industry is able to keep working.

“Government work seems to be the majority of what’s available,” Osman said. “Everything’s down. Retail is down, medical is down, multifamily is down. It’s across the board.”

At Solomon, Osman and his colleagues have been lucky of late. Some longtime relationships resulted in the company landing a round of projects worth almost $57 million. They include an assisted-living facility in Crossville and a new building for the Nossi College of Art in Madison.

For its part, Conseco has been able to keep its work force busy by developing its own projects. While the firm has always dabbled in developing, the emphasis has shifted toward such work in the recession.

“We’re driving a lot of our own work, and that’s huge,” Pace said. “We become our own client.”

A longer-term issue — and one that has been bubbling under the surface for more than a decade — is the age of the construction industry’s work force. The average worker’s age has been rising steadily and a vast number of skilled people are projected to retire in the coming years. (A study by Canada’s Construction Sectors Council says retiring workers will outnumber new entrants there by 2015.)

Dan Brodbeck, president of American Constructors Inc. and chairman of the local chapter of the ABC, says the industry is actively working to train the next generation of contractors and builders. The ABC currently has a program where it works with area high schools to provide some advanced skill training in the curriculum.

“We’re teaching them sheet metal and electrical and plumbing, and that goes to some craft training that they can get after they get out of high school,” Brodbeck said. “Not everyone is made to go to college, so we’re looking to train them now and let them know there’s an option — an alternative — if you don’t go to college, there’s still this industry.”

Even if those programs produce the desired results, they are mid- to long-term solutions. The question dogging members of the industry now is when construction will pick up again. There is a demand for new buildings, Brodbeck says, but the market uncertainty has forced skittish spenders to hold back.

“All the elements are there,” Brodbeck said. “We’ve just got to get the confidence to start spending again. When the work comes back, we’re coming back. It just might be like this for another year.”

And it just might be a year that makes good talent all the more difficult to find.