Avoiding potholes of the past to focus on future success

The Southwest Washington Contractors Association (SWCA) continues to keep our eyes on the road ahead for the construction industry. Looking to the future is critical for success, in addition to remembering the past to avoid the potholes we hit nearly a decade ago. Being aware of trends affecting construction at the national, state, and county levels will guide us in decision-making processes that will create a bigger, long-term economic impact. 
 

National:

Our research tells us that construction is one of the largest industries in the United States. Studies indicate that the total construction payroll in the U.S. was nearly $6 billion in 2015. This amount was approximately 9% of the total payroll, inclusive of all industries combined. During this timeframe, there were 667,100 construction firms, of which 92% employed fewer than 20 workers. The annual pay of all construction workers in the U.S. averaged $57,000. This salary was 8% more than the average salary throughout the nation. A 2016 report published by AGC of America’s Chief Economist, Ken Simonson, implies that filling jobs in the construction industry at the national level continues to be a challenge.  

State:

In Washington state, construction contributed $18 billion, nearly 4% of the state’s $444 billion GDP. Construction workers’ pay in Washington averaged $55,900 annually, earning 1% more than all private sector employees in the state. Washington had 20,500 construction firms in 2014, of which 93% had less than 20 employees.  According to Washington State Economist Scott Bailey, state wide construction employment as of June 2017 was 203,100, up 8% compared to June 2016. It has been reported by multiple economists throughout the state that there is a large backlog of projects in permitting pipelines, and on the schedules of both public and private organizations. As a result, construction should stay strong for several years. 

Clark County:

It should be no surprise that Southwest Washington is an area that continues to flourish. Reports list Clark County as one of the fastest growing counties in the state. Current construction projects illustrate the county’s growth:

• In 2016, seven local school districts passed levies that will pay for new buildings and other infrastructure projects. 
• The Vancouver Business Journal’s Top Projects Awards highlighted over $384 million worth of projects. For instance, Gramor Development continues making progress on the $1.5 billion Waterfront Development. The Port of Vancouver publicized that the Waterfront Development will bring a direct economic impact of $209 million generating 2,036 local jobs.
• Recently announced by The Columbian, La Center is moving forward with plans to develop 150 acres along I-5.

Construction employed 12,700 in Clark County as of June 2017, up 8.5% from last year, according to Scott Bailey. We’ve discussed in previous publications that for every million dollars invested in new commercial construction, $1.89 million is generated in added sales. We know that hiring local companies is low-hanging fruit for spurring economic development in Southwest Washington.

All of this is good news, but comes with a critical challenge that is causing a drag on our local economy; a huge shortage of qualified workers. The labor shortage is taking a major toll on the industry. Lack of qualified workers impedes on project timelines and creates backlog. Thus, workforce development is our biggest challenge. 

The Columbia-Williamette Workforce Collaborative data tells us that 20% of the regions construction workforce is at or nearing retirement age. In ten years, there will be 15,000 new jobs in the industry. How will we replace those exiting the industry and satisfy the needs of growing companies? 

To satisfy the needs of business short term, the SWCA will roll out a Construction Executive Summit, February 15, 2018. The goal of the summit is to help the industry to increase efficiencies through implementation of best practices and the building of relationships with construction professionals throughout the region. As an association we are proponents of laying the groundwork for business success through equal, affordable educational opportunities.

The labor shortage is already hindering our economy and threatens to become an even bigger problem. Government entities are addressing the issue but can’t fill the need fast enough.  We ask our local educators to bring more emphasis on the trades in the classrooms, as the construction industry offers good paying jobs that can support a lifetime career. Avoid the potholes of the past; let’s start focusing on preparing the industry for future success.  

Written for the Vancouver Business Journal.