0
0
0

Skilled Labor Shortages Threaten to Stall Eager Builders

by James McClister

Builders want to build but face stifling shortages to skilled labor.

skilled-labor-shortage-texas-houston-oil-prices-builders-construction

On January 26, the price of crude oil dropped to $45.15 – its lowest point since 2009. Since October 2014, we’ve been following the dips in oil price, attempting to weigh the future ramifications, and something we’ve been particularly adamant about is the eventual redistribution of labor from the energy sector to construction, which struggled with shortages in 2014. As we’ve seen already in the rash of layoffs from some of the state’s biggest energy employers, like BP, as the price of oil drops, energy companies will shed portions of their workforce to supplement lost revenues. And, as a new 2015 construction outlook published by the Associated General Contractors of America points out, construction companies are poised to benefit from those replenished labor pools.

According to AGC’s report, 80 percent of Texas construction companies plan to expand payrolls in the new year – up 10 percent from 2014 – which points to either a wave of hefty pay increases – unlikely – or an intention to increase hiring. Asked in a survey, construction representatives responded overwhelmingly that anticipated sector growth was the catalyst for the increases.

Bad for Energy, Good for Everyone Else

Approximately two-thirds (60 percent) of respondents agreed the construction industry would see growth in 2015, and a further 21 percent expect that growth to carry over into the following year. The report’s author attributed a portion of the increases to oil prices, telling local Houston Public Media that while low crude prices will hurt the oil and gas industry, they should work to bolster activity in other sectors, “including downstream oil and gas.”

“In fact, petrochemical producers are probably helped by the drop in oil prices in dollar terms,” Ken Simonson, chief economist for AGC, said. “It’s given us a further advantage over other countries that have seen their currency depreciate against the dollar. They haven’t gotten the same benefit from reduction in oil prices that U.S. consumers of oil have.”

Of the 80 percent of companies shuffling resources for expanded payrolls, 90 percent are intending to extend budgets by as much as 26 percent, while the remaining 10 percent are looking at increases of upwards of 50 percent or more. Confidence is clearly running high among construction sector executives, but AGC warns builders not to get ahead of themselves.

“Although their outlook is relatively optimistic, contractors still face a number of significant challenges,” the report reads. “Foremost among those challenges is the growing shortage of qualified workers – especially craft workers – to fill available positions.”

Read More Related to This Post

Join the conversation

Oops! We could not locate your form.