It is not too difficult to find articles citing the construction
industry’s woes over the shortage of available skilled
workers. All sorts of initiatives, efforts, and conferences
have been held on the topic for the last decade or so in an
effort to reach more young people and gain more entrants
into the industry.
According to the Bureau of Labor Statistics (BLS) and
National Association of Home Builders (NAHB) there
are currently 143,000 vacant construction positions
nationwide. And these job openings are not minimum
wage positions either. BLS data shows that the mean
wages for a person in the non-residential building industry
is just over $25 per hour. Of course, this is a general
average among all trades and regions, but certainly
respectable pay
A recent survey by the NAHB revealed that 69% of its
members were experiencing delays in completing projects
on time due to a shortage of qualified workers, while other
jobs were lost altogether. And the problem isn’t going
away anytime soon.
According to the 2015 Workforce Survey Results from
Associated General Contractors (AGC) of America, over
60% believe it will continue to be hard to hire or become
harder to hire construction professionals. In 2010, the
average age of a construction worker was 40.2 years. By
2016, that number rose to 42.7 years, demonstrating that
the workforce continues to age.
So, if we have nearly 150,000 openings at an average
of $25/hour, why can’t we fill these jobs? In our opinion,
it comes down to three things:
• Lack of workforce training
• Culture of inefficiency
• Working harder, not smarter
Lack of workforce training – Just because there are
143,000 openings now, doesn’t mean there are 143,000
qualified people to do the work where it needs to be
done. Over the past decade, U.S. educational policies
and resources have shifted more towards college
readiness, at the expense (we think) of vocational
training programs. Local, state, and federal policy
makers need to recognize and support the value and
importance of community colleges, apprenticeship
programs, and vocational training on our economy.
(See sidebar story on TRACOM).
The outlook for the construction industry, in terms
of job opportunities, is strong. On their website, BLS
states: employment of construction and extraction
occupations is projected to grow 11% from 2016 to
2026, faster than the average for all occupations, a
gain of about 758,400 new jobs. Overall growth in the
economy and population will increase demand for new
buildings, roads, and other structures, which will create
new jobs in construction and extraction occupations.
The median annual wage for all construction and
extraction occupations was $43,610 in May 2016,
which was higher than the median annual wage for
all occupations, which was $37,040. If we can’t find
workers now, where will we find the three quarters of a
million more workers needed to fill these positions?
Culture of Inefficiency – In the construction industry,
nearly 42% of all workers are employed by “very small
employers” (defined by the U.S. Census Bureau as
fewer than 20 people). That is nearly 2.5 times the
national average of 17.6% of all workers in all industries
employed by very small firms.
Many of these very small employers have little to
no experience with the challenges of owning and
operating a business. Specifically, smaller contractors
struggle with recruiting, screening, and training
new employees, navigating the human resource
requirements, offering and managing fringe benefits,
and regularly evaluating and promoting workers.
“Training” consists almost exclusively of on-the-job
experience.
So, it may not be a huge surprise to learn that safety
has been, and continues to be, an issue in the
construction industry. The BLS reports that there were
985 industry fatalities in 2015, up 5% from 2014. There
was also a 15% increase in the number of reportable
injuries and illnesses, according to that same 2015 AGC
workforce survey.
These issues lead to higher costs, higher turnover,
lower productivity, and lower employee morale.
Within the private sector, workers in manufacturing
had the highest tenure among major industries, at 5.3
years in January 2016, compared to 4.0 years for the
construction industry (BLS).
Working harder, not smarter – The reality is actually the
opposite of the old saying we’ve all heard 1,000 times.
When it comes to construction, the answer always
seems to be “we need more people.” The construction
industry is one of the few remaining industries so
heavily reliant on physical labor, embracing the “next
man up” mentality. No time for training, gotta get the
job done on time.
According to McKinsey Global Institute: “Consider
that in the United States between 1947 and 2010,
agriculture achieved cumulative real growth in its
productivity of 1,510% and manufacturing 760%.
Construction managed only 6%. U.S. construction-sector productivity is lower today than it was in
1968, and investment has fallen over the past decade.
Over the past 20 years, productivity has grown at only
1% annually, only around one-third the rate of the world
economy and only around one-quarter of the rate in
manufacturing.”
What’s the Message?
Is it any wonder that younger people are NOT entering
the construction industry? Our policy makers place little
to no value on vocational training. Small employers
are more focused on selling the next job than training
and retaining employees. Fringe benefits? Steady
paycheck? Maybe, maybe not. Hard work, harsh
outdoor environments, risky working conditions? Highly
likely. Cool stuff like technology, automation, building
information modeling? Not at most of the construction
companies – no time, budget, or appetite for those
things.
The Modular Solution to the Construction Labor
Problem – Industrialization
Currently, the modular industry in the United States
accounts for about 3% of all new building and home
construction starts, a much lower adoption rate than in
other developed nations. In Japan, for example, nearly
20% of all homes are constructed with an industrialized
or prefabricated process. Sweden has the highest
adoption rate with a whopping 84% of detached homes
prefabricated.
There is a major difference between the US (and
Canadian) industry compared to other European and
Asian countries. In North America, we still CONSTRUCT
buildings piece-by-piece, nail-by-nail, site-by-site, with
all the variables, conditions, and challenges associated
project-by-project. Other countries approach their
construction industry with a manufacturing and
assembly focus. They think in terms of processes
instead of projects with a goal of minimizing waste and
inefficiency
The Japanese are experts in lean manufacturing
techniques. They used this expertise to “school”
the U.S. auto industry in the 1970s-80s. They also
transferred their knowledge and best practices from their auto industry to their construction industry. Today,
about seven major modular home factories in Japan
crank out over 100,000 homes annually. That’s more
than the entire U.S. modular home industry. Ironically,
the U.S. auto industry DID eventually learn this lesson
and now assembles cars made up from components
manufactured at other plants. It no longer takes a
mechanic to build a car.
Another major difference in adoption rates is that other
governments are banking on and supporting industrialization and manufacturing efforts. The U.K. government
recently announced a deal with a Chinese company to
open six manufacturing plants in the U.K., employing
U.K. citizens and building 25,000 housing units for the
people of the U.K.
Now, at this point you may be thinking that industrialization of the construction industry would mean FEWER
workers needed. Possibly. More accurately it would
mean workers with a slightly different skill set are
needed.
Japanese modular home manufacturer Sekisui Heim,
the house-building segment of the Sekisui Chemical Company, is one of the largest modular home
manufacturers in the world. The company employs
nearly 4,000 people at their eight manufacturing plants,
which produce over 1,000 homes each month. Simple
math shows that on average, 4 workers build one home
each month.
Many countries are embracing industrialization in part
due to difficulty in finding labor, but also due to the high
demand for more affordable housing inventory. In the
U.S., we currently have:
1. A shortage of skilled construction labor.
2. A shortage of decent, affordable housing
inventory.
3. A vastly under-utilized manufacturing base/
infrastructure.
4. A need for more stable, predictable jobs.
The modular industry can offer more predictable work
locations and hours, less labor-intensive work, a higher
degree of technology integration in the work place, and
much safer working conditions.
We can serve as a catalyst for the major rebirth of the
US manufacturing base, creating thousands of new
jobs while addressing our own massive infrastructure
needs. It just makes sense, doesn’t it?
Now, here’s the kicker – if U.S. construction industry
and policy makers DO NOT endorse/encourage/
support the industrialization of the construction
industry, it will happen anyway with someone else in
the driver’s seat. Foreign investment will continue to
flow into U.S. construction markets. We can encourage
investment in our manufacturing capabilities, or we can
keep trying to sell buggy whips, rotary phones, polaroid
film, and beta max movies.
Training Program Provides
Skills and Credentials for
Industry.
TRAMCON (TRAining for
Manufactured CONstruction) is
a $10M grant-funded program
through the U.S. Department of
Labor. TRAMCON is a consortium
of 4 Florida colleges (Miami Dade
College, Santa Fe College, Polk State
College, and Seminole State College)
selected to provide a tuition-free
training program in manufactured
construction.
The program combines curriculum
developed by the University
of Florida, National Center for
Construction Education and Research
(NCCER), and the Manufacturing
Skill Standards Council (MSSC)
to create a standardized model
for manufactured construction.
TRAMCON is designed for
participants to gain stackable
qualifications which consist of up to
seven credentials and certifications
(OSHA, MSSC, 3 NCCER Credentials,
Fork Lift, and Aerial Platform
certifications).
The purpose for the development
of the TRAMCON program is to
provide training for the manufactured
construction industry in order to
increase productivity and reduce
turnover of employees through
training and education. To date, the
consortium has 1,744 participants,
1,356 completers, and 1,687
certificates earned.
Santa Fe College has had amazing
success stories with these
participants. One participant who
had been unemployed for quite
some time completed the foundation
level of training and was placed
in a job in a local woodworking
shop. He continued the TRAMCON
program and completed Basic and
Advanced Levels while working
fulltime. Another participant came in
as an unemployed veteran. He had
previous construction experience,
but had no credentials or certification
to show for it. He completed the
foundation level of training and
gained employment with a local
company that manufactures and
builds theme park attractions and
decorations. He has since been
promoted from his original position
and loves his job!
The program is currently in the
wind-down stages of training and
will end on March 31, 2018. The
participating schools are now looking
for ways to assist employers and
industry leaders in educating and
training employees in manufactured
construction. Over the past two
and half years using the TRAMCON
model, the program administrators
have a good idea of best practices,
what works, and how to best deliver
manufactured construction training.
The goal is to see TRAMCON
continue as either a short training
program, a pre-apprenticeship
model, or a full apprenticeship
model.
If you are interested in learning more
about this program, contact MBI for
program details.
This article originally appeared in the Modular Advantage Magazine - First Quarter 2018 released in February 2018.