If they come, you can build it
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No Comments [ Add Comment ]By Jeff DeMoss
Standard-Examiner staff
jdemoss@standard.net
Utah's construction boom leaves contractors scrambling to find workers, and paying more for those they can find
OGDEN -- Mike Hernandez has been working construction in the Ogden area for three years, pouring concrete, hauling materials, and doing whatever work has been available.
The Roy resident's hourly wage increased by 20 percent last year when he switched to a new employer, but he said he has considered going to work in Salt Lake City, where he could make even more.
"I had an offer for $12 (an hour) in Salt Lake," said Hernandez, who is making about $10 an hour in Ogden. "But I like working close to home."
Construction has been Utah's fastest-growing industry in the red-hot economy, and local contractors are experiencing growing pains as they struggle to find enough people to handle work that just keeps coming.
"We are quickly facing a situation where demand is outweighing supply of skilled workers," said John Parson, chief executive of Staker & Parson Cos., the state's largest concrete and paving contractor.
Or, as Dave Hogan, president of Ogden-based Wadman Corp., put it, "It seems like there's plenty of work and not enough people to do it."
The situation has spawned a wage battle in which contractors are tapping each other for workers by offering higher pay or other benefits.
"We've got a lot of calls from headhunters lately," Hogan said. "There's a lot of carrots out there. When it gets like this, it starts becoming about the almighty buck."
In a demand-heavy environment, loyalty and employee longevity become especially valuable, he said.
Statewide, construction valuation reached a record high of $5.4 billion in 2006, according to the industry research service Construction Monitor Inc.
The construction industry in Utah alone added about 13,500 jobs last year for a growth rate of 16 percent, according to the Utah Department of Workforce Services, and is expected to grow by another 31,000 jobs by 2014.
"We're starting to feel that real tight labor market," DWS Senior Economist Mark Knold said. "Not only does it drive up wages, it also creates unmet demand out there and drives up building prices."
The demand has driven construction wages up at double-digit rates in just the past year in some areas.
With unemployment in the state at a 50-year low, all industries are facing shortages of qualified people, but the deficit is especially pronounced in construction, Knold said.
Tim Gladwell, retail operations manager for Ogden-based R&O Construction, said there is some concern that major retail and office projects started or planned in downtown Salt Lake City may start drawing workers away from projects in the Top of Utah.
"We're having to pay employees more to keep them here," Gladwell said. "Salt Lake is just going nuts."
He said recruiting and retaining enough workers to handle big projects, including the high-adventure recreation center in downtown Ogden and a new Wal-Mart Supercenter in Centerville, has been challenging, but hasn't caused any major delays.
"Manpower is always a constraint that contractors have to deal with in the busy summer months, and we'll see it again this summer," he said.
Labor supply in the current construction boom is a challenge for the entire industry, but the bigger issue for them is recruiting young people into the field, Gladwell said.
"The new generation is used to playing with computers," he said. "They don't want to go out and do hard manual labor."
That is translating into a dire shortage of supervisors and others with the years of experience needed to work effectively without constant supervision.
The reluctance of youth to enter the field is puzzling, he said, since most unskilled, entry-level construction jobs in the area pay between $8 and $10 per hour to start -- a higher wage than most comparable jobs in other industries.
Hogan, of Wadman Corp., said while larger companies are facing labor shortages, the smaller subcontractors are having more difficulty in the current environment.
"We have our own concrete crew and carpentry crew and so on," Hogan said, "but some of the subs can't find the labor, or have to pay twice what they're used to for it."
The construction boom has been driven by a strong residential market in the past few years, which has translated into strength in the commercial sector as well.
Overall, vacancy in Weber County office space fell from nearly 20 percent in 2005 to 15 percent in 2006, according to commercial real estate firm Commerce CRG. In Davis County, office vacancy declined from about 18 percent to 10 percent.
Weber County also saw less vacancy last year in retail and industrial properties, while those sectors experienced slight increases in Davis County.
Immigrant workers, who already comprise the majority of construction laborers in the state, have been crucial to alleviating the shortage. But even with the influx of workers from out of state, local companies are still competing for a shrinking labor pool.
"Construction still continues to grow at double-digit rates, but that will start to slow unless we have a lot of in-migration," Knold said.
The Associated General Contractors of Utah predicts that commercial construction, particularly retail construction, will start to taper off within a year or so as housing construction begins to slow.
"Commercial tends to follow residential," Gladwell said.
A major recruitment effort planned for this month will attempt to drum up more interest in construction among junior high and high school students.
The annual Utah Construction Career Days event, scheduled for April 17-19 at Thanksgiving Point in Lehi, will connect hundreds of educators and employers with thousands of students.
Parson said the goal of the career fair is to show young people "the tremendous opportunities at building a career in this quickly expanding industry."
For more information on the fair, call (435) 757-8513 or (435) 770-8893.
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