Adapting to the Changing Labor Landscape in Commercial Construction

The construction industry is one of the most important sectors of the economy, especially in Arizona where it plays a significant role in the state’s overall growth and vitality.

As the fourth fastest-growing state in the nation and the fifth best in terms of economic growth, Arizona’s backbone is robust in construction with nearly 150,000 construction workers in the state, according to the Bureau of Labor Statistics.

With deep roots in Arizona’s growth, and in fact all over the Southwest, we have seen many ebbs and flows in the industry, especially when it comes to labor trends. Though we continue to grow at a steady pace, the industry grapples with challenges related to labor shortages, rising costs and a lack of trade education, all of which are impacting builders, clients and the overall economy.

Industries across the board are being forced to do more with less, especially when it comes to doing business against the backdrop of the current labor market. Construction companies are no exception, and we diligently address these issues head-on using an array of strategies.

• Addressing Labor Shortage: For several years, the industry has struggled with a shortage of skilled workers. According to a recent report by the Associated General Contractors of America, 81% of construction firms have difficulty filling skilled labor positions. This shortage has led to increased labor costs as companies compete for a limited pool of workers with the necessary skills. At AP, we’ve learned that the key to ensuring a well-staffed project is to offer attractive compensation packages, in addition to job training and a collaborative work environment. By creating a workplace that values and invests in its employees and contractors, companies can attract the best workers in the industry even in tight times.
• Investing in the Next Generation: The lack of trade education industry-wide is also compounding labor shortage issues. Many young people today are not pursuing careers in the trades at the same rates they used to, which has created further strain in staffing among construction companies. From electrical to plumbing and beyond, we are investing more time and resources into training our teams – both internal and external. Currently, AP has an eight-week on-site job training program that provides the necessary skills and tools that entry-level workers need to build successful careers.
• Navigating Rising Labor Costs: As companies compete for a limited pool of skilled workers, they are forced to offer higher wages and benefits to attract and retain employees. To mitigate rising labor costs, AP works diligently to find other areas of cost savings across the board, so the client isn’t covering the increase in labor costs. For example:
• AP will bulk-purchase long-lead items that may be needed months from now on the job site. If we know that two or three clients will require a certain type of flooring, we can spec in advance and make purchases before pricing goes up. This locked-in pricing gives us the chance to offset material price increases and apply savings to other line items on the job’s budget.
• Similarly, AP challenges our partners – from architects to designers – to provide designs early on so we can work together to find similar cost-effective options if initial selections come at premium prices. Whether it’s a plumbing fixture or a light canister, flexibility allows us to pivot and save thousands of dollars that can offset the rise in labor costs.
• Bridging the Gap with Technology: It’s imperative to keep pace with technological advancements to address labor shortages, especially when it comes to ingenuity and productivity. For instance, AP leverages Building Information Modeling (BIM), drones and robotics to increase efficiencies and reduce the bottom-line impact of our projects. In addition, these tools help us bridge the labor shortage gap by automating job functions that would otherwise require skilled workers. It’s important to realize that investments today will help clients and construction companies win in the long term.

There is no industry in Arizona that has been unaffected by the current labor market. But there are smart ways of getting around labor shortages, rising labor costs, lack of trade education and technology adoption. While many see these trends as challenges, AP sees them as opportunities for innovation and growth for years to come, not only for us, but our clients as well.