U.S. construction projects are running short of workers just as rising costs are postponing builds and scaling back others. Leading companies are getting creative to attract and retain younger workers. However, those potential craftworkers are reluctant to sign up for jobs they consider dirty and dangerous. This comes as funds from President Biden's $1 trillion infrastructure plan, which intends to increase highway program funding by roughly 25%, begins disbursement Chris Doyle, CEO of Billd, breaks down the struggle of the construction industry and how combines are incentivizing workers. 

Opening Bell

Construction Worker Shortage Continues Amid Massive Infrastructure Intuitive

here to discuss more chris Doyle ceo of build. Thank you so much for joining us. I'm wondering what is the main factor contributing to the labor shortage that we're seeing now among construction workers? Yeah, it's really age. Uh, you know, a lot of the troubles that contractors have is that they have an aging workforce and they don't have new employees to come in and replace and that's really up and down the employee, whether your project manager, superintendent, field worker day labor or whichever that may be. Yeah, what else are you seeing and hearing from contractors right now? So with the pandemic, big struggle over the last few years has been the material price volatility. So the labor shortage has really been going on for over a decade. And then you have this sudden issue with material price volatility between lumber, steel, etcetera. And so as a contractor, you get these projects normally months, sometimes years in advance and that volatility affects your margins drastically. So, you know, it's like you're in a kitchen, you've got a lot of burners going, your material price is catching on fire. Now everyone's looking back at labor and now that that's coming down a bit, you're going back to labor and oh, by the way, we've got to solve this problem, which is not easy to solve in the short term. Yeah, it's incredible because there's so many factors at play here, we've seen a huge demand for construction really across the board during this pandemic having to deal with those materials costs changing and also supply chain issues. But another big thing at play here is federal funding. Can you explain that dynamic and kind of break down if you anticipate federal funding could ease some of these labor issues that we're seeing within the sector. Sure. At the macro level, federal funding will certainly help and the way that will help, especially in the broader conditions we're in now there is concern about a downturn, but with the federal funding coming in that supplements any potential downturn, at least in nonresidential construction and so a lot of the broader long term labor shortage issues are a lack of long term spending for these contractors to say, okay, I'm going to retain these employees even though I have project volatility where I may not need them for a month or two or I have excess labor so I can invest in those employees long term in more of a career mindset rather than I have this one project and need 20 extra labor. Yeah, I want to jump ahead to something I was hoping to save till the end, but we're hearing that potentially um there could be layoffs within this industry as it relates to the housing market. So that's residential. Something that struck me was that you made the distinction between residential and nonresidential, are you expecting that layoffs could be hitting this industry as well? And how much more does that federal funding come into play there? Sure, most of that will translate over between residential and commercial or non residential. With the exception of things like sales, things that don't necessarily go over to commercial as easily. So, um, regardless of that though, there will still be a shortage of labor um and especially skilled labor. So things like welding, it doesn't really exist as much in residential but will be in high, high demand for a lot of the infrastructure type projects. Yeah. And if these contractors cannot find enough workers, what kind of impact does this have on the overall industry, Especially when it comes to building uh new commercial properties we had mentioned residential also as a distinction here. Yeah, I think you'd look at it as um just like any other industry, there's really large players and their small business is the thing to remember about construction is the majority of the actual throughput is fueled by small businesses so called that under $50 million in annual revenue. And so these are the ones that are not, don't necessarily have large infrastructure to serve or training programs, recruiting programs broader, you know, call it regional national programs to recruit in workers. And this is where you're going to get that squeeze. And in the short term there's not a whole lot you can do other than increasing pay that's going to affect margins, which is fine and price of the projects. However, in the long term, in the way these projects work, there needs to be features in the contracts that are that allow the contractor to support that increase in labor costs, along with the increase in material price. So long as that happens. Right? So that pricing volatility between material and labor is a real factor for these small businesses. And with the contracts being committed to sometimes a year, six months in advance, it really doesn't accommodate that volatility. And what ends up getting squeezed is the small business. In that case, I'm really glad that you make uh that note about small businesses really fueling this sector because a lot of the time people think commercial and I think of the industry leaders, right. The giants within the sector, but you really illustrate this issue very well when you talk about the squeeze here on margins because of having to increase pay for talent. Um So that's kind of the small business picture. What are those giants doing to retain talent right now? Well, quite frankly, most of the labor comes from those doing the work. So that would be more in the small business side. So on a $1.5 trillion industry, about 600 billion. That throughput is through the actual contractor doing the work. Now, the larger contractors can support. And I think you can see in the latest Wall Street Journal article, they're supporting things like relocation bonuses, housing, but things like that, which small businesses can also accommodate. But a lot of this is basic stuff if you're going to travel to three hours, you need a housing allowance, right? You need travel per diem and things like that. So I don't look at that as a way to attract, that's like the standard. Um, you know what you need to attract is career progression, right? How does someone that gets in will use labor again, start in that industry and grow. How do you see the vision of your career, that's what's lacking for the larger folks to say, hey, this is how this works, You start here, then you go here and then you move on to this and this is a really attractive career over 20 years. And that's the recruiting pitch that construction has really lacked over the last couple of decades. That's a really good point because when you mentioned relocation bonuses and housing, I was like, okay, that's gonna attract a lot of younger workers. But no, the solution really is career advancement knowing that this can be a long term thing. Um, what do you think the solution is for that moving forward because something's gotta give here. Um, and what's your outlook for just the industry as a whole, so long term? I think the solution really is recruiting training education much earlier. So in the high school zone will call and so I started a construction when I was 16, right? And this was hourly job. I got, I loved it. You know, I was a day laborer, but I got a tan, it paid cash every week. I loved it. And then I fell in love with that. Right? And so I stayed in the industry over 25 years. So I think early recruitment, maybe not 16 necessarily, but high school programs, college and associate degree programs, skilled trades. These are things that you can make a considerable investment in. Now to bring up this workforce. Look, construction is not going away, right? Robots, robots are not going to start building large bridges anytime soon. So this investment is the investment in the infrastructure of the country. So good to have your expertise. That's chris Doyle ceo of build. Thanks for joining us.