The Associated General Contractors of America and Sage Construction and Real Estate recently released the 2021 construction hiring and business outlook survey. It revealed that few construction firms will add workers in 2021 with many firms struggling with declining job opportunities and many other obstacles. The findings are detailed in The Pandemic’s Growing Impacts on the Construction Industry: The 2021 Construction Hiring and Business Outlook Report. (https://bit.ly/3qukHoo)
“The outlook for the industry could improve, however, if federal officials are able to boost investments in infrastructure, backfill state and local construction budgets and avoid the temptation to impose costly new regulatory barriers,” said Steve Sandherr, AGC of America’s chief executive officer. “But, even as we work to advocate for measures to rebuild demand for construction, we also need to take longer-term steps to continue developing the construction workforce.”
That said, most contractors expect demand for many types of construction to shrink in 2021 even as the pandemic is prompting many owners to delay or cancel already-planned projects, meaning few firms will hire new workers.
“This is clearly going to be a difficult year for the construction industry,” said Sandherr. “Demand looks likely to continue shrinking, projects are getting delayed or canceled, productivity is declining, and few firms plan to expand their headcount.”
The percentage of respondents who expect a market segment to contract exceeds the percentage who expect it to expand – known as the net reading – in 13 of the 16 categories of projects included in the survey. Contractors are most pessimistic about the market for retail construction, which has a net reading of negative 64 percent. They are similarly concerned about the markets for lodging and private office construction, which both have a net reading of negative 58 percent.
Other construction categories with a high negative net reading include higher education construction, which has a net reading of negative 40 percent; public buildings, with a net negative of 38 percent, and K-12 school construction which has a net reading of negative 27 percent.
Among the three market segments with a positive net reading, two – warehouse construction (+4 percent) and the construction of clinics, testing facilities and medical labs (+11 percent) – track closely with the few segments of the economy to benefit from the impacts of the coronavirus.
Firms report that many of their already-scheduled projects have either been delayed or canceled. Fifty-nine percent of firms report they had projects scheduled to start in 2020 that have been postponed until 2021. Forty-four percent report they had projects canceled in 2020 that have not been rescheduled. Eighteen percent of firms report that projects scheduled to start between January and June 2021 have been delayed. And 8 percent report projects scheduled to start in that time frame have been canceled.
Few firms expect the industry will recover to pre-pandemic levels soon. Only one-third of firms report business has already matched or exceeded year-ago levels, while 12 percent of firms expect demand to return to pre-pandemic levels within the next six months. Fifty-five percent report they either do not expect their firms’ volume of business to return to pre-pandemic levels for more than six months or they are unsure when their businesses will recover.
Only 35 percent of firms report they plan to add staff this year. Meanwhile, 24 percent plan to decrease their headcount in 2021 and 41 percent expect to make no changes in staff size. Firms do vary by region in their hiring outlook. In the South, the percentage of firms that expect to add employees – 39 percent – is more than double the percentage that expect to reduce headcount – 17 percent. The outlook among firms in the Northeast is nearly opposite: fewer than one-quarter of respondents expect to increase their headcount in 2021 while 41 percent foresee a reduction.
Despite the low hiring expectations, most contractors report it remains difficult to fill some or all open positions.
“The unfortunate fact is too few of the newly unemployed are considering construction careers, despite the high pay and significant opportunities for advancement,” said Ken Simonson, the association’s chief economist. “The pandemic is also undermining construction productivity as contractors make significant changes to project staffing to protect workers and communities from the virus.”
Officials with Sage noted that firms are being more strategic about information technology as they try to remain competitive in the current environment. Sixty-two percent of contractors indicate they currently have a formal IT plan that supports business objectives, up from 48 percent last year. An additional 7 percent plan to create a formal plan in 2021.
The 2021 Construction Hiring and Business Outlook report was based on survey results from more than 1,300 firms from all 50 states, plus Puerto Rico and the District of Columbia. This article speaks to cumulative data gathered from contractors across the nation. The charts specifically represent a sampling of responses from only Georgia contractors. To view the full data set of Georgia-specific responses, please visit https://bit.ly/2Kqg7rS.
Sandherr said the association is addressing the workforce challenge by crafting a new plan that focuses on continued advocacy, helping its 89 chapters’ staff and members establish or improve training programs and launching a new, national workforce recruiting effort called “Construction is Essential.” It will use targeted digital advertising to complement and build on the many existing local and regional construction workforce campaigns, including the robust efforts already in place with AGC Georgia.
Mike Dunham, AGC Georgia’s chief executive officer, said, “While we are fortunate to have Georgia’s construction industry keep working through the pandemic, we know contractors are desperate to return to some normalcy that helps with morale, workflow, scheduling and so much more. Together with our colleagues and partners at AGC of America, our team’s objective is to make sure contractors end 2021 on a far better note than many are starting it.”