The Industry Strikes Back: A Conversation on the Workforce Shortage and What Can Be Done About It

The Industry Strikes Back: A Conversation on the Workforce Shortage and What Can Be Done About It

Many electrical contractors are plagued by a short-sighted view of workforce development, thinking that employee education and training falls outside their responsibility. They expect field electricians and office staff to start their jobs fully prepared for their roles. In contrast, successful contractors understand the impact of workforce development and its direct connection with recruitment of top candidates, a concept that applies to service-oriented organizations more than any other entity.

The following is a conversation between the authors regarding changes for our workforce and their impacts on the future of our trades. We conclude with suggestions for improvement through training and development. We would enjoy hearing from you about workforce development and its future as well!

What is the problem?

The construction industry is far-reaching in terms of its contribution to employment and national spending, including the number of related occupations. Buildings require a vast workforce across a large supply chain before beginning construction. Construction costs of a facility are a zero-sum game: each contractor’s gain or loss comes at the expense of others along the supply chain. Therefore, changes in the workforce are straining our ability to build affordably. To maintain and grow a competitive workforce, we need to train employees for new technologies and management that aid productivity. Following, we describe some of these recent changes and their impact on our workforce.

McCoy: Since the Great Recession, the nature of the industry has changed considerably. If you look at industry numbers, some general trends appear. Average construction costs increased five times from 1908 to 1960 and nine times from 1960 to 1990. Then, from 1990 to 2014, the cost of buildings doubled, and the cost of materials increased 1.8 times. Hence, producing buildings is expensive. We are not as productive as we could be in delivering buildings.

According to the Bureau of Labor Statistics (BLS) report “Productivity Growth in Construction” (2014), “productivity growth [in construction] was negative from 1967 to 1987, close to zero from 1987 to 1997, but has been substantially negative since then.” In comparison, manufacturing productivity has grown 1.7 times more than construction over the same period.

The nature of our industry has changed over the last 30 years. The wider construction market used to be driven by smaller, geographically isolated firms using their own crews to deliver buildings. Firms today are increasingly consolidating the supply chain across many regions countrywide, and some are now publicly traded. Nevertheless, we are a fragmented industry with many stakeholders that resist change for different reasons. The residential construction industry substantially contributes to employment and national spending across construction and various related occupations and economic stakeholders. Each stakeholder along the supply chain resists new processes, products or services for various reasons.

Our industry is diversified, and clients expect more from our buildings. Firms produce buildings today for projects ranging from housing to government and industrial clients, from nonprofits to developers of multibillion-dollar mega-projects; from units with small footprints to high-rises; from sophisticated financial investments to work-from-home enterprises. Buildings now contain increasingly advanced technology that requires technical knowledge and frequent, continuing training to maintain and service. Unfortunately, we are often not sophisticated enough. As an industry, we need to collect, analyze and use data better to become more agile in today’s market.

According to “10 Ways Construction Companies Can Outsmart The Labor Shortage” from Construction Dive, construction executives rank difficulty filling open jobs as the industry’s top uncertainty. With many in the industry leaving due to the Great Recession, retirement or being poached by other industry sectors, we must increase existing workforce skills and promote from within. Training and educating people in the industry and others about the industry is the best way to meet future demand and drive needed change and technology adoption.

Sargent: We’ve seen it all already. New construction has boom and bust cycles, sometimes nationally, sometimes regionally and sometimes just locally. The current situation has been particularly acute with shortages in manpower and materials.

Buildings now contain increasingly advanced technology that requires technical knowledge and frequent, continuing training to maintain and service. Unfortunately, we are often not sophisticated enough. As an industry, we need to collect, analyze and use data better to become more agile in today’s market.

We have expected this for years; long enough to do something about it. Why is anyone acting surprised? There is no magic remedy for the immediate problem, but there are long-term solutions that deserve consideration.

For starters, we should not tie productivity so closely to the skills or availability of construction workers, as industry observers so typically do. Although construction workers have an obligation to work productively, they are not responsible for productivity. Construction customers, designers and contractors are also responsible for productivity. However, although they could help smooth volatile construction booms, they do not.

Delayed or indefinite decisions by customers, imperfect work of designers, and hidebound management practices of contractors exacerbate the situation when a boom occurs. As the saying goes, insanity is doing the same thing over and over again and expecting different results.

Greater productivity by these stakeholders can help offset manpower requirements during booms. The construction industry is perpetually criticized for failure to improve productivity. Then, has the individual output of workers changed over the years? Workers are at least as fit for duty as they ever were. Although drug-related problems in the workplace exist, they are not the reason for an overriding damper on productivity.

Building products are better than ever and have been the principal contributor to better field productivity in the electrical construction field. “Productivity” begins with “product.” Manufacturers have contributed mightily to increasing field productivity through continuous improvement in the ease of use of electrical products.

Owners, designers and contractors—groups that could make a difference—have continued to disappoint. However, they are the ones whose voices are heard, so the dialogue about manpower shortages continues just as it always has.

How did we get here?

Next, we discuss what these trends mean for our industry broadly and then focus on the trades, especially ECs.

McCoy: The U.S. construction industry employs 6.73 million people (according to BLS data), with an average age of 41.3 years, projected job growth of 1.2 percent, and average salary of $48,763. Since the Great Recession, flexibility and adaptability have driven growth. Surviving firms had to reach beyond their core business and diversify to meet new markets and establish new niches within existing markets. This trend has not slowed.

Moreover, productivity is driving growth. Nationally and locally, the number of establishments and employees in the construction industry has decreased significantly since 2008 while wages have increased significantly. That is, we have a smaller workforce that is doing more, getting paid more, and making it difficult to deliver affordable projects.

Electrical contractors represent 6.1 percent of all construction workers and have an average salary of $48,759.60. The nature of the electrical contracting market is significantly changing with respect to disciplines and markets. ELECTRICAL CONTRACTOR’s 2018 Profile of the Electrical Contractor finds that, in particular, technology and systems are a major area of growth for ECs. Therefore, they must prepare and train for this technology growth to stay competitive in the changing market. (Read the Profile article in the July 2018 issue or at profile.ecmag.com.)

It is not only the typical characteristics of a construction business—safety, quality, cost and schedule—that influence our ability to provide affordable options. It is increasingly the responsibility of construction educators to help drive this change and provide leaders for the industry.

Sargent: As an industry, we got here by failing to recognize emerging patterns in the changing world around us. That failure is partly because there has been very little strategic thinking applied by business experts to analyzing the past and predicting the future course of the industry. Has anyone ever seen an MBA case study centered on an electrical contracting enterprise?

Organizations can inherently benefit from maintaining a healthy balance between promoting from within and recruiting outside talent. Specifically, the EC industry suffers from an unhealthy degree of inbreeding, and it is rare that anyone from an unrelated field enters electrical contracting at a managerial level.

Technology adoption has to be examined carefully. Who is supposed to be switching over to a new technology level? Electrical workers cannot make buying decisions about purchases of new “technology,” so the switch-over is not theirs to initiate.

That is, contractors are the ones to implement technical improvements of their companies. There are very few early adopters in the ranks of ECs, and this situation will continue in the short-term. Then yes, we need continuing education for electrical workers and, more important, for ECs.

What can be done?

Now that we understand the issues at hand, what solutions exist? How do training and workforce development factor into these solutions?

McCoy: It is not only the typical characteristics of a construction business—safety, quality, cost and schedule—that influence our ability to provide affordable options. Our ability to produce buildings with a diverse workforce trained to respond to industry needs through innovation and technology also is important. It is increasingly the responsibility of construction educators to help drive this change and provide leaders for the industry.

One particularly ripe growth area is middle management, as individuals move up to fill positions. Young, technically savvy employees may need to be retooled for the pressures of managing others and accomplishing organizational needs. Middle managers must motivate those around them while also responding to needs from above. This requires both leadership and management skills that many do not naturally have.

In response, university educators are developing curriculums in areas such as innovative technologies, advanced construction management principles, business principles and nontechnical skills. However, solutions must exist beyond four-year degrees.

Recruiting plays an important role. Recent trends in recruitment include actively coordinating with career counselors at local middle and high school programs. Many industry professionals have programs that teach modules at these school levels or engage through student-based service programs. Recently, the old-school shop class is making a resurgence to ensure that secondary education offers this path to students not interested in a four-year degree. Furthermore, many apprenticeship programs help recent high school graduates integrate with an industry job. If a student wants to attend college and save money, less-expensive two-year colleges now offer a path toward the trades and can transfer credits straight to the four-year path if desired.

Sargent: Introducing new entrants into the electrical contracting business is the best way to improve the industry’s future in terms of workforce development. As electrical and low-voltage work opportunities meld using new technology similar to how telephones and computers were conjoined decades ago, tech-savvy entrepreneurs may arise to become the new princes of this realm.

Gone will be the old thinkers who believed that the most iconic symbol of their company’s expertise displayed on their website was a picture of multiple concentric bends of 3-inch conduit or embedded stub-ups in an excavation. In will come new thinkers who combine technical smarts with business acumen to create new enterprises with appreciating market value.

Once, electrical contracting was akin to what we now call “high-tech.” Someday, with a fresh supply of new entrepreneurs, it may very well return to such status.

About the Author

Andrew McCoy

Service and Maintenance Contributor

Andrew McCoy is the Preston and Catharine White Fellow and Department Head of the Department of Building Construction in the Myers-Lawson School of Construction at Virginia Tech. Contact him at apmccoy@vt.edu.

About the Author

Fred Sargent

Service and Maintenance Contributor

Fred Sargent is an electrical industry consultant focusing on service expertise. He can be reached at fred@sargent.com.

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