Issue link: https://read.dmtmag.com/i/358154
36 | www.cedmag.com | Construction Equipment Distribution | August 2014 Construction Overview The construction industry is continuing to recover from a five-year slump, but gradually and unevenly. Paradoxi- cally, increasing numbers of contractors report difficulty finding skilled workers. Construction spending and employment both bottomed out in early 2011, after peaking in the spring of 2006. Spending tumbled 38 percent – even without taking infla- tion into account – while employment fell by 2.3 million workers or 30 percent. By May 2014, construction spending had reached $956 billion, up 27 percent from a low of $755 billion in February 2011. At that rate, it will take until mid-2017 for spending to surpass the mark of $1.2 billion set in March 2006. However, after taking price increases into account, the increase to date is more like 17 percent, or roughly 5 percent a year in "real" (price-adjusted) terms. Unless spending accelerates (as it has, slightly, in 2014), it won't set a new high until 2021. Construction employment has grown even more slowly than spending. By June 2014, employment stood at 6.0 million, up 11 percent from the low point of 5.4 million in January 2011. The unemployment rate for former construction workers that month was 8.2 percent – higher than the rate for all nonfarm payroll workers (6.1 percent) but far lower than the 20 percent rate for construction workers four years earlier, near the bottom of the industry's slide. That drop in the industry's unemployment rate meant that more than a million former construction employees were no longer unemployed. Unfortunately, employment in the construction industry rose by only half as much over that interval. In other words, more than half a million experienced construction workers have now left the industry. Some were hired by other sectors, such as oil and gas or trucking, that have expanded and need workers with similar skills. Others retired, went back to school or left the work- force. In any case, they are no longer sitting at home and looking for work while they wait for a contractor to call them back to a construction job. The mass exodus of skilled workers might not be such a big concern if there were a robust pipeline of new workers entering the industry. But the supply of new workers – which was already a worry for construction executives before the long downturn – is now thinner than ever. Historically, construction attracted high school graduates who did not want to go to college (at least immediately), people completing military service, immigrants, and appren- tices completing union training. Now, however, the number of high school graduates has leveled off, and fewer high schools offer career and technical education classes to prepare students to go into construction (or other fields). The military services, especially the army, are shrinking. The flow of immigrant workers has slowed to a trickle as the U.S. tightens control of the border and as the Mexican economy improves. Union enrollment has fallen and many apprentice- ship programs have been suspended or terminated. Contractors Contend with Uneven Growth But Also Worker Shortages It's no surprise that the only real trouble-free sector – for financial health and workforce stability – is energy. BY KEN SIMONSON