What can you do when there aren’t enough construction workers to do the job?
People that watch the calendar know that November 11 to 17 was National Apprentice Week in the US. It’s a time to focus on the next wave of workers coming into the industry. But for those who build things for a living, there was some heavy subtext that went along with Apprentice Week.
Right now, the construction industry is facing a crippling labor shortage. And according to the Associated General Contractors of America (AGC), 80% of contractors in the US can't find qualified workers. That’s a national average. In some regions, the number is higher. “There aren’t enough carpenters,” says Ryan Ware, Vice President of Construction at Vantis in Santa Clara, California. “There aren’t enough electricians. There aren’t enough plumbers. You get a painting crew on-site and it’s a crew of a couple of people to paint an entire building.
You can see it in any level of construction. There is a tremendous shortage of workers.Ryan Ware, Vice President of Construction at Vantis
Ultimately the reason for the shortage is simple. There aren’t enough people choosing construction as an occupation. The statistics vary by region, but it’s been widely reported that for every four journeymen contractors that retire, only one-up-and-comer is there to replace them. Some districts put that number as high as eight retirees for every replacement. It’s a trend that will continue. Construction Business Owner says that by 2031, 41% of the current work force will retire. That’s creating a huge vacuum with nobody to fill it.
Cause and effect
When it comes to new talent filling the void, young people just aren’t considering the world of construction. They have been conditioned by their parents to think it’s archaic. Even dangerous. And in a connected world where technology reigns supreme, a lot of high-school and college grads are looking for jobs that tap into that. Tech-related companies are a draw for those entering the job market. And traditional construction doesn’t have that reputation.
Those left on the jobsite are facing burnout as they have to do more with less. And clients are paying for it. With fewer people to do the job, prices go up and schedules get longer. Forbes has reported that construction wages are up 3.8% year over year, but that stat doesn’t tell the whole story. According to Mike Iannone, the director of constructability at DIRTT, it impacts the whole industry.
“Large contractors that pay top price are getting the available work force,” he says. Due to the shortage, general laborers in Seattle are earning up to $100/hour. Between two to three times what it used to be. With uncertainty being the only certainty, contractors are artificially padding their schedule to ensure delivery.
“Project start dates are getting pushed back. It’s always been typical, but it’s starting to happen on a much greater magnitude,” says Iannone. “They may have had 15 electricians, but because that contractor is working on multiple projects, there’s only six electricians the next day. If you’re doing a 2,000 square foot commercial tenant improvement project, it could be very difficult to find someone to do that in a timely manner.”
The industry has changed dramatically.Ryan Ware, Vice President of Construction at Vantis
Now smaller companies can’t afford those higher rates for labor. If they can find someone to fill the position, they often have less experience. “You have a gap in training,” says Ware. “You have a loss in ability.”
It’s like the old saying, they just don’t make ‘em like they used to. A less-skilled labor force can’t make complex buildings. The cost and intricacy are too great. “So, we’ve lost quality which makes the architecture simpler,’ says Ware.
And the trickle down is even more troubling. Spaces are less impactful. Projects are downsized. Upgrades aren’t happening. Talent-driven companies can’t recruit in the way they want. And they can’t retain. “Their jobs are to recruit the best talent they can and conventional construction can’t provide the spaces that they need in order to benefit our economy,” says Ware
All this to say, the effects of the labor shortage are huge. And wide reaching. It’s got everyone trying to figure out how to fill the gap.
Apprentices to fill the gap
This makes apprentices that much more important in the world of construction. According to Ware, it’s time to train people to fill these jobs, but it can’t be business as usual. In order to prevent a further exodus, there has to be a new approach. “We need students who know how to build things, but we also need students who know how to run technology and still know how to manage projects but do it in a different way,” says Ware. “That means students go to school to learn technology and they learn to think. They come out and solve the problem.”
This is great, but it’s only a start. Conservative estimates say getting these apprentice tradespeople up to speed could take as long as eight to 12 years. That begs the question: What do we do now?
This is our problem to solve.Ryan Ware, Vice President of Construction at Vantis
Time for a change
There isn’t just one way to find a solution, but Ware says off-site construction is a leading choice. Prefabrication streamlines the process by putting the bulk of materials and labor in the same place. Interiors are built in a factory and assembled on site. A 2019 report from McKinsey puts the cost savings of off-site construction as high as 20%. And the time savings as much as 50% compared to conventional means. According to Iannone, it’s a method that’s poised for a huge expansion. “Contractors now have to face up to the fact they’ve got to get more done with less people,” he says. “The more that they can bring to site that requires less labor to assemble, the better.”
DIRTT is a great option to alleviate the pressures of this labor shortage. Prefabricated DIRTT takes less time to install and fewer people to do it. And because it’s a multi trade solution, it becomes even more efficient.
“It picks up speed from framing to finish,” says Ware. “If we can tilt all the frames and get an inspection done immediately and start installing the finished faces of the system, we have just eliminated numerous stages that would have been done in the conventional process.
Take the electrical impact for example. A DIRTT wall panel ships with power already inside. “You need fewer electricians onsite for fewer days,” says Iannone. “We don’t need people to get into our wall to put stuff in. In a conventional build, every piece of conduit and wire is cut and done by hand on-site. From a structural standpoint the people who are doing framing and Sheetrock are focusing on core-and-shell rather than offices and corridors and conference rooms. So, you are seeing a scope reduction… that is significant enough to allow them to take on projects with a much smaller skilled workforce.”
“If you can reduce your electrical, flooring, framing and sheet rock labor because DIRTT is being employed, it reduces the labor burden on the general contractor,” says Iannone.
While the hourly labor rate on a DIRTT project is often the same as it is on conventional jobs, the work is done in less time. This gives contractors a huge opportunity when it comes to how they use their work force.
“It doesn’t eliminate the bodies. It just optimizes the bodies that are left onsite from the other trades. But it takes fewer DIRTT installers to do that work than it does in the conventional world,” says Ware. “And it takes them less time to be onsite.”
A prime example of this is EvergreenHealth. This progressive care unit was slated for a 45,000 square foot renovation over two floors. When the team looked at what they had to do, they realized that they couldn’t build it out conventionally and still make their target date. DIRTT was a different story. They went from a cold shell to 62 patient care rooms in only eight months. This allowed contractors to move on to the next project sooner and the chance to generate more revenue elsewhere.
“The GCs used to be very resistant to DIRTT because they did see a reduction in hours for their people. Now they are seeing it as a way to leverage their abilities to continue to service multiple clients,” says Iannone.
Time to deliver
The construction labor crisis is going to take some work to fix. But according to Ware, it’s not impossible. He says a part of finding the solution is changing the way we think. And a new wave of apprentices and a new way of doing things could be just what it takes. “We are so stuck on what’s been done in the industry,” says Ware. “We need students to go to the what ifs.” If we do that, we’ll be able to build our future.
“Let’s stop saying there’s a problem and start saying these are the solutions to address it,” says Ware. “What are we truly capable of doing?”
DIRTT Environmental Solutions uses its 3D software to create prefabricated interiors. Each space is tailored to our clients' needs. Manufacturing facilities are located in Phoenix, Savannah and Calgary. DIRTT works with nearly 100 construction partners globally. DIRTT trades on Nasdaq under the symbol “DRTT” and on the Toronto Stock Exchange under the symbol “DRT”.