“The projections released by the BLS confirm what economists and business owners are both seeing: what many believed to be a temporary, Covid-induced lack of workers is, in fact, a ‘forever’ labor shortage,” said Tom Bowen, an economist at payroll-and-benefits provider Gusto Inc.
He said slower population growth from fewer births as well as a drop in immigration over the past several decades have also contributed to the upcoming crunch.
“Without these sources of younger workers, the average age of the working population has been rising, which, in turn, has been driving both the long-term labor shortage and has increased demand for services such as health care and social assistance,” Bowen said.
So what have businesses been doing in response? They’re increasingly hiring contractors, with Gusto data showing the share of companies turning to contract workers has grown 28% since the start of the pandemic. Companies that are fully remote have also been increasing their hiring of foreign workers, with 20% of fully remote companies having at least one international employee.
While the overall population of those not in prison will grow by 18.7 million over the next decade, only about 6.5 million will be a part of the workforce, according to BLS projections. But older Americans not working will still be a driving force in the economy, as they require services and purchase goods — which means economic growth will remain largely the same as the last decade.
The 0.7% annual population growth through 2032 is a drop from the 0.8% annual population growth between 2012 to 2022, and is one of the lowest population growth rates since the BLS began tracking that data.
But some groups are expected to see a growth in their percentage of the workforce. Women ages 25 to 54 are projected to see their participation rate grow from 76.4% in 2022 to 76.7% in 2032. Men ages 25 to 54 are expected to see theirs drop from 88.6% to 86.7%.
What else are companies doing in response?
Beyond relying more heavily on contract workers, companies of all sizes are having to get creative in recruiting and retaining employees.
John Morgan, president at talent management and advisory firm LHH, said the demand for healthcare and other services from older American will only continue to grow. And while automation will ease some of the pain of the tight labor market, demand will far outstrip worker supply.
“If you look at the sheer numbers of them there are not enough people to fit the roles we project to be open in the future,” Morgan said. “However the mix of jobs or skills is you are going to have to do a better job and a different job of recruiting talent because the overall population is going to be smaller.”
Companies are adapting, Morgan said, with some using artificial-intelligence technology to better search for and identify potential candidates instead of typical methods like searching on LinkedIn or recruiting from local colleges.
Many companies are also rethinking requirements for various jobs, including a focus on skills over degrees alone. Morgan highlighted the tech industry as one where a bootcamp degree or skill certificate can be enough for a job that might have normally been filled by an applicant with a four-year degree.
Ultimately, companies need to do more to appeal to workers, especially younger ones, Morgan said. Pay and benefits must be competitive. But perhaps more importantly, companies need to be sure they are identifying and providing workers with a career track they can follow, or they might end up leaving for greener pastures.
“From a retention driver, it’s not salary or benefits that’s the biggest retention driver. It’s helping people, especially early-stage career folks, identify what the career path in the company is and giving them the experience they want,” Morgan said. “People are leaving because they don’t know where their next move is.”
Smaller businesses in particular might not be able to keep up with the demands of filling open roles in a world where technology is quickly changing and online job postings are no longer enough.
“If you are a small business owner, you don’t have the time or money or resources to stay abreast of this because it’s changing really quickly,” Morgan said, adding it might be time for some businesses to consider outsourcing that work. “You are kind of doing this on your own.”
Economist Anirban Basu said one potential solution would be to dramatically expand legal immigration — or face the consequences of a decline in growth that could then threaten government services, as tax revenues fail to keep up with the cost of services.
“What this really suggests is that America needs an antidote, and that antidote is stepped-up legal immigration into the country to expand more rapidly the size of the labor force,” Basu said.
Fisk University in Nashville, Tennessee, opened a new 98-bed student housing complex composed of repurposed shipping containers earlier this month. The $4 million project was developed in partnership with Nashville-based The Bradley Projects.
The new dorms were created in response to the historically black liberal arts college’s rising enrollment. The student body has grown by almost 70% in the past five years to over 1,000 students, according to Jens Frederiksen, Fisk executive vice president.
The container units, which opened for new student move-ins on Aug. 5, make up the university’s fifth residence hall. Fisk is also building a new dormitory building, set to be ready for move-ins next fall. The shipping containers are meant to provide a more rapid solution to the university’s housing needs, Frederiksen told Multifamily Dive.
The 40-foot-long containers are arranged in blocks of four, stacked two units high and two units wide, with wooden staircases leading up to the second-floor dormitories. The exteriors are solid blue and gold, matching the school’s colors.
Inside, the units feature wood-like flooring, stainless steel appliances, recessed lighting and contemporary-style finishes, according to a unit tour posted on the university’s X, formerly known as Twitter, social media platform. “Once you walk into one,” Frederiksen said, “you forget that you’re in a shipping container.
The facility was built by Archie, Missouri-based Custom Container Living and assembled by Nashville-based Certified Construction Services.
While the units were meant as a stopgap measure, student feedback on the new dormitories, both on the design at the development stage and from residents just moving in, has been overwhelmingly positive, according to Frederiksen.
“[We’re] dealing with a generation that is intrigued by innovation, sustainability and thoughtfulness about fixing problems along the way,” he said. And… [the units] look amazing.”
Even after the next new residence hall is completed, Frederiksen anticipates that the shipping container units will remain in use on campus.
“I think it may end up being more permanent than people anticipated,” Frederiksen said. “If the current trend continues, we have some aging infrastructure on the residential side that we also have to tackle, whether it’s a matter of breaking down and rebuilding or some major deferred maintenance. The containers will give us that flexibility in the foreseeable future.”
The use of shipping container dormitories is relatively unique — two residence halls at the College of Idaho in Caldwell, Idaho, built in 2019, were the first U.S. projects of this kind. However, other types of housing developers have made use of both new and used shipping containers for the past several years. They are seen as a cost-effective, environmentally friendly alternative to new construction.
Based on average cost data that states submitted to the DOT, ARTBA estimates it would cost over $319 billion to make all needed repairs. By contrast, the Infrastructure Investment and Jobs Act designates $40 billion in federal money over five years for bridge repairs and replacement.
Bridges newly rated in poor condition this year include I-345 over I-30 and US 75 Dart Rail in Dallas, the Lacey V. Murrow Memorial Bridge in Seattle and the Route I‐678 span over Flushing Bay Promenade in New York City.
Happily, there are 560 fewer bridges in poor condition than last year. Over the past five years, the share of bridges in fair condition has continued to grow as the percentage of spans in poor or good condition declined. Thanks to increased federal investment, there is more money available to address these gaps — but many states are not taking full advantage, ARTBA’s analysis showed.
States currently have access to $10.6 billion in IIJA Bridge Formula Program funds to help make needed repairs, and another $15.9 billion will be available in the next three years. These funds have helped support over 2,060 bridge projects in the construction and repair pipeline, according to the ARTBA report. Another new IIJA bridge program, the Bridge Investment Program, has an additional $12.5 billion for projects that will be awarded through 2026.
However, as the end of fiscal year 2023 approaches on Sept. 30, states have committed $3.2 billion — just 30% — of available bridge formula funds to 2,060 projects, with $7.4 billion still coming, according to ARTBA. Only eight states have committed more than two-thirds of their bridge formula funding to specific projects, while 31 states have committed less than a third of available money as of June 30.
In 2023, nearly half of all U.S. bridges — 48.9% — were in fair condition, while bridges in poor condition make up 6.8% of the overall inventory.
Other bridges newly rated in poor condition this year include:
NC 58 over the Intracoastal Waterway in North Carolina.
I‐84 White Salmon over the Columbia River in Oregon.
State Route 51 Northbound in Sacramento, California.
LA 27 over the Intercoastal Waterway in Gibbstown, Louisiana.
US 21 Southbound over Beaufort River in South Carolina.
PR 53 over Grand De Patillas River in Puerto Rico.
SH 146 over Clear Creek and Shipyard Drive in Texas.
In an interview with Scripps News, Transportation Secretary Pete Buttigieg said there has not been sufficient funding for bridge repairs for many administrations, which has created a massive backlog.
“We’re taking historically large steps, but the work of reversing probably 40, 50 years of degradation or underinvestment is going to be more than a couple of years’ work,” said Buttigieg. “The important thing is right now we are moving it in the right direction so that instead of getting worse, it’s getting better.”
The U.S. construction market is starting to shift in the wake of less work from the private sector and ramped-up spending in industries like infrastructure and manufacturing, bolstered by federal incentives.
And while supply-chain issues and higher materials prices have normalized since the peak of the Covid-19 pandemic, inflation, higher interest rates and — most notably — labor shortages are challenging company leaders across the industry.
The Associated General Contractors of America, in partnership with Autodesk Inc., in its annual workforce survey released this month found 88% of construction firms are having a hard time finding workers to hire. More than 1,400 firms in the construction industry completed the survey in late July and early August.
General contractors are struggling to find not only skilled laborers, but also workers who have even basic skills to work in construction. According to the AGC survey, 68% of firms say applicants lack skills needed to work in construction.
The numbers come at a time when the construction industry is facing a generational skills gap, with its workforce aging up and fewer younger workers entering the market to backfill more-experienced positions. The median age of construction workers is 42, one year older than the typical worker in the U.S. labor force, according to the 2021 American Community Survey.
The construction industry had 363,000 job openings in July, according to the Associated Builders and Contractors and data from the U.S. Bureau of Labor Statistics. Industry job openings decreased by 23,000 from June but are up by 10,000 from the same time last year.
Even though starts have slowed — year-to-date through July, total construction starts were 7% below the comparable mark in 2022, according to Dodge Construction Network LLC — there’s still not enough workforce for the amount of work in the pipeline. In July, 4.4% of industrywide positions were unfilled, a share higher than one year ago and at the start of the pandemic in 2020, according to the ABC.
‘Money doesn’t seem to be the driving factor’
Several contractors spoke during a Sept. 6 media event hosted by AGC to talk about the challenges they’re facing in hiring and retaining workers — and the strategies they’re employing to try and fill those employment gaps.
Bill Ryan, workforce development and education coordinator at Dick Anderson Construction Inc. in Butte, Montana, said an overhaul of the company’s apprenticeship model has led to a surge in its retention rate, going from 20% to between 70% and 80% in the past two years. The program today includes, among other things, an opportunity for high-school students interested in construction as a career to work on job sites one or two hours after school.
Ryan said the company is spending upwards of $500,000 on training and education this year, an amount he expects to go up in future years.
He said it’s critical to understand the motivations of younger workers today and how construction can fit within those parameters.
“We’re finding out, from some of our younger employees, they don’t want overtime. Their motivation is free time, and what they get to do with their free time,” Ryan said. “We have to shift how to approach and work with the younger generation.”
Hal Fuglevand, vice president of operations support at Knife River Corp. in Billings, Montana, said despite increasing benefits, pay, time off and other incentives in recent years, it’s hard to fill open positions at his company.
Eighty-one percent of firms have raised base pay rates for their workers during the past year, the AGC survey found. Additionally, 44% said they’re providing incentives and bonuses, while 26% of firms say they have improved their benefits packages.
For a lot contractors, being able to rely on hired workers to show up to job sites has even become tougher.
“Money doesn’t seem to be the driving factor,” Fuglevand said. “[For] people that they are able to hire, it’s like a revolving door. [Workers] just won’t show up to a big concrete pour scheduled at 4 in the morning. Three guys out of 10 just don’t show up. … Maybe two show up the next day, but they know they’re not going to be disciplined,” because of how difficult it would be to replace those workers.
There’s also not enough affordable housing for the industry’s workforce, especially in a place like western Montana, Fuglevand said, making it tough to attract people to the area. Like other firms, Knife River has begun recruitment efforts in high schools.
Executives said more efforts need to be made at the federal level to address the shortage of workers in construction, including efforts to tap into the “hundreds of thousands of capable, willing workforce at the border,” Fuglevand said.
Kenna Smith, talent acquisition manager at The Branch Group Inc. in Roanoke, Virginia, said her company typically has more than 100 open positions a month. In the past six moths, that number has been closer to 150.
Positions that’ve become especially hard to fill include estimators, project engineers, and experienced equipment operators and trade workers. Branch Group has a program that does outreach in local elementary schools, an effort to try and change perceptions early on about what a career in construction could look like, Smith said.
She also referenced the revolving-door nature of her company’s workforce, noting retention efforts have become as critical as recruitment.
“We can’t keep bringing them in the door while two more are going out the door,” Smith said, adding Branch Group within the next month plans to hire an experienced learning and development specialist to get training initiatives across the finish line.
Skilled aspect of the labor pool is a pressing issue
The future is tough to predict as the economy slows in the wake of higher interest rates and as fewer developers take out construction loans, but labor is expected to remain a challenge in a potentially slower building market.
Andrew Volz, Americas project and development services research lead at Jones Lang LaSalle Inc., said in an interview with The Business Journals he consistently hears from contractors they’re not staffed at a level to cover even their current volume of work.
Much depends on a specific market and how much construction is going on there, he said.
“How many square feet of construction are going on in a given metro area and how many workers have they gained or lost since the pandemic?” Volz said. “In a lot of places, there’s a massive increase in the work available for every contractor. They’re not going to be able to cover it. That pipeline and ratio of work to worker is going to stay very high for the next couple of years.”
For much of the construction industry, there are scars from the global financial crisis in 2008, when development dried up and many construction workers left the industry permanently, Volz said.
With recession fears in play today, many companies are trying to be proactive about keeping skilled workers on their payroll even if construction activity slows.
JLL predicts total construction spending will be up about 6% year-over-year, thanks largely to projects in manufacturing and infrastructure boosted by federal incentives.
Volz said wages in construction will likely continue to go up — JLL is predicting a 5% to 7% annual increase this year — but the skilled aspect of the labor pool remains a pressing issue.
“We have folks who are more willing to move crews across state lines simply to get their specialized work done, whereas before, they’d be willing to work with local talent,” he said. “It’s a different world there. There needs to be an investment [at] the entry level — upskilling and growth of a new cohort of skilled labor.”
The construction industry is not invulnerable to the challenges posed by inflation, labor shortages and supply chain disruptions. With terms like “recession” and “economic downturn” being thrown around, many contractors are concerned about how these issues will affect their business in the coming months and into 2024.
Unfortunately, experts anticipate continued slowdowns in construction due to supply chain bottlenecks, rising costs and high-interest rates. Since these challenges aren’t likely to be resolved any time soon, the best thing contractors can do is become aware of the industry’s top concerns and identify solutions to keep their projects on track.
Current Industry Challenges
The construction industry is an essential part of the world economy and has proven that it can endure and thrive in even the most challenging circumstances. The question isn’t whether the construction industry will make it through the difficulties ahead, it’s how well individual companies will fare.
Fortunately, knowing what issues the industry faces can help contractors plan for success.
Companies across all industries are struggling to hire and retain good workers, but the construction industry has been hit particularly hard.
Demand for construction workers is at an all-time high but the number of skilled workers is lower than ever. This has been felt industry-wide, with last year’s Associated General Contractors of America survey showing that 91% of contractors reported having trouble filling positions. What’s more, the industry will need to hire an estimated 546,000 additional workers to meet production demands in 2023 into 2024.
Supply Chain Disruptions
The supply chain is still recovering from the massive bottleneck caused by COVID-19. Additionally, U.S. contractors are feeling the strain of the Build America, Buy America Act, which impacts federally funded construction projects and requires that more parts and materials be purchased in the United States. Unfortunately, many companies have had challenges attaining U.S.-made materials due to a current lack of manufacturing capacity for certain items.
Together, these issues are creating unprecedented material wait times.
Inflation and Material Costs
According to Associated Builders and Contractors, construction input prices have increased by 37.7% since 2020 and since last year, they’ve increased by 4.9%. While this might sound bleak, the year-over-year increase has improved significantly from 2021, which was up 23.1% from 2020.
Although the cost of some materials has dropped steadily over the past year, like lumber and softwood lumber down 12.3% and 44.1% respectively, other materials have seen a sharp increase in recent months. Concrete products are 14.8% higher than last year.
Settling into the new norm is the only realistic option right now, which means contractors are looking for ways to cut costs, protect their assets and stay ahead of potential losses.
On the bright side, many economists and contractors have been through similar economic downturns in the past, with many believing the economy is still strong enough to keep the industry out of serious trouble. Their experience can help others in the industry get a handle on what’s needed to not only survive but thrive in the current climate.
By keeping up to date with industry issues and trends, contractors can get ahead of challenges and adjust their strategies accordingly. Articles, analyst reports and newsletters help keep the industry informed and working together.
Plan for Setbacks
Supply chain challenges mean that even the most diligent contractors are likely to get hit with parts shortages and delays. The tips below can help increase the chance of success:
Place orders earlier to minimize delays.
Develop a contingency plan for material shortages or delays to help keep projects on schedule.
Shop around for backup vendors, subcontractors and better rates.
Deploy security cameras and professional monitoring services to safeguard purchased materials.
Focus on Workers
Maintaining a strong business during these uncertain times depends on project completion, and those projects depend on workers. That means finding and retaining skilled employees must be a major focus moving forward.
Tips to Attract and Retain Good Workers
Offer Competitive Pay – Prospective employees are looking for a decent paycheck, but they’re also making judgments on the company’s quality based on what they’re paying. Highly skilled workers’ expectations are higher, which means companies who offer competitive pay and benefits are likely to attract higher-quality workers.
Focus on Diversity – Women, minorities and military veterans are all underrepresented in the construction industry. Interestingly, a study by McKinsey & Company found that companies with higher gender diversity were 25% more profitable than less diverse companies.
Look for New Recruitment Opportunities – Participating in job fairs and trade shows can be a great way to attract workers from both inexperienced and skilled backgrounds.
Build a Supportive Work Culture – It’s simple: Good workers stay at companies that are good to work for. Providing a safe and enjoyable work environment with opportunities for advancement is a great start. Workers want to feel like they’re valuable members of a cohesive team, and they’ll often thrive when they’re set up for success.
Preventing the loss of valuable materials is essential to maintaining a profitable business, particularly when costs are so high. This means that once materials are on site, contractors must make ensure they’re safe from theft and damage.
One of the easiest ways to prevent losses is using cameras on your job site. Many insurance companies offer discounts to contractors who deploy security cameras and professional security monitoring on their projects.
Ultimately, building a safeguard against profit losses is one of the most effective steps a contractor can take to protect their company.
Even in these uncertain times, the construction industry has staying power and so do the contractors who represent it. By staying ahead of challenges, working together, cutting costs and maintaining hope for the future, the industry is likely to come out stronger than ever.
A bill proposed last week by six Republican senators would require all employers to use the U.S. Department of Homeland Security’s E-Verify program to authorize employment eligibility and would increase the national minimum wage from $7.25 an hour to $11.
Titled the Higher Wages for American Workers Act, the bill proposes a phased expansion of E-Verify that would require employers with 10,000 or more employees to use the system beginning six months from the date of enactment. Smaller employers would be categorized based on the size of their workforces, and each category would have a corresponding deadline to begin using E-Verify, an online federal system that allows employers to confirm the eligibility of employees to work in the U.S.
The bill also would increase penalties for employers that employ unauthorized workers and would permit DHS and the Social Security Administration to establish a self-verification process through which individuals may verify their employment eligibility.
“Our proposal would raise wages for millions of workers without risking jobs, and tether the wage to inflation to ensure it keeps up with rising costs,” Romney said. “Additionally, requiring employers to use E-Verify would ensure that the wage increase goes to legal workers, which would protect American jobs and eliminate a key driver of illegal immigration.”
Ten states currently have E-Verify requirements for private employers. When Florida’s law was enacted this summer, proponents said it would protect jobs and contribute to national security, but others predicted a tough road ahead for employers and workers alike, especially in construction. In 2020, there were an estimated 1.4 million foreign-born, non-citizen, Hispanic laborers in the U.S., according to CPWR — the Center for Construction Research and Training.
For employers in Florida the law brings unpredictability at a time of high labor demand and a shortage of workers.
“There’s great uncertainty as we sit here today,” Mark Neuberger, a Florida-based labor and employment attorney at Foley & Lardner LLP, told Construction Dive. “It could all settle down or it could be disastrous.”
Brian Turmail, vice president of public affairs and strategic initiatives for the Associated General Contractors of America, said the association supports E-Verify — if its use is paired with other reforms, including the establishment of a temporary guest worker program for the construction industry.
Calling the current national approach to immigration “extremely flawed,” Turmail said federal officials have long put the responsibility for checking workers’ legal status on employers — where he said it doesn’t belong.
“At least E-Verify gives them some ability to do that,” he told Construction Dive. “But make no mistake, expanding E-Verify does not compensate for the lack of broader, desperately needed immigration reforms. These include better border security, the establishment of a guest worker program and providing some kind of path to legal status for the undocumented workers currently in this country.”
While the future of the Senate legislation is uncertain, if the bill becomes law, its implementation will be slowly rolled out. Beyond the requirement taking effect within six months of passage for firms with more than 10,000 employees, companies with between 500 and 9,999 employees would be required to begin using E-Verify beginning nine months after enactment. The timeframe is expanded to one year for employers with between 20 and 499 employees and to 18 months after enactment for all other employers.
Employers that begin operations after the bill’s enactment would have one year to comply.
The bill’s minimum wage increase provisions would also be implemented in a phased manner. The federal hourly minimum wage would be increased to $8 on the effective date, followed by increments of less than $1 each year until reaching $11 four years after the effective date. Thereafter, the minimum wage would be indexed to inflation every two years.
Houston-based Fidelis New Energy has started development and launched permitting for a $2-billion hydrogen production plant in West Virginia. It will power an associated data center megasite as well as industrial manufacturers, transportation companies and utilities. The energy company said the Mountaineer GigaSystem in Mason County would produce blue hydrogen from natural gas and store CO2 emissions underground on state-owned property, with its first phase to open in 2028.
Fidelis has finalized with state officials an operating agreement for sequestration pore space and targeted storage capacity. It selected Battelle Carbon Services in early September to drill and collect test well data and submit sequestration permit applications, and has a letter of intent with Babcock & Wilcox to evaluate, develop and deliver four hydrogen production plants at the site using biomass and natural gas.
Each plant would produce 500 metric tons per day of net-zero carbon hydrogen, using Fidelis’ proprietary technology that allows hydrogen production with zero lifecycle carbon emissions from a combination of natural gas, renewable energy and carbon capture and sequestration, the company said. The hydrogen would also be used for transportation and steel production. Waste heat and captured carbon dioxide would power greenhouses for food production.
“By combining several proven technologies from leading providers including Topsoe and B&W, we are able to produce lifecycle carbon-free clean hydrogen at scale without taking new technology risk,” said Bengt Jarlsjo, president and COO. He and CEO Daniel Shapiro, company co-founders, are also management veterans of Quanta Services.
Under its state agreement, the firm will receive $62.5 million in forgivable state loans, including $25 million for preconstruction that involves obtaining permits and drilling sequestration wells. It would be forgiven if the activity was finished in three years. The remaining $37.5 million would be forgiven if the project meets certain employment and investment commitments.
John Musgrave, executive director of the Mason County Development Authority, said the four-phase development will create 4,200 construction jobs and 800 full-time jobs.
Data centers at an adjacent megasite called Monarch Cloud Campus will use several other Fidelis technologies. The firm will spend an estimated $5 billion more to build out the data center site that would use about 1,000 MW of power, it said.
Fidelis is a partner in the Appalachian Regional Clean Hydrogen Hub, which links private industry, state and local governments, academic institutions and technology firms to vie for funding as part of the U.S. Energy Dept.’s planned national clean hydrogen network. DOE will select six to ten hydrogen hubs this fall to receive support from a $7-billion program funded through the 2021 infrastructure law.
The hubs are meant to demonstrate production, processing, delivery, storage and end use of clean hydrogen. Developers of each hub must fund at least 50% of its estimated cost, which ranges from $800 million to $2.5 billion. The federal award includes support for planning, development and construction of the hub and two to four years of operations
But a coalition of 17 state and national project opponents said in an August letter to the U.S. Environmental Protection Agency that they are skeptical of the carbon capture and storage technology and of West Virginia’s ability to safely oversee its implementation. They want EPA to reject a state request to regulate wells to be used for carbon injection.
Scout Motors, an American automotive company and subsidiary of Volkswagen Group, recently paused pre-construction site clearing activity that had begun early at its $2 billion electric vehicle plant in Blythewood, South Carolina, according to the company. Concerns from environmental groups and state and federal agencies around wetland development caused project teams to hold off further construction work while permitting moves forward, according to a statement shared with Construction Dive.
Meanwhile, battery manufacturer American Battery Factory postponed construction of its $1.2 billion lithium phosphate battery factory in Tucson, Arizona, until November, according to a Pima County board of supervisors meeting on Sept. 5. Project teams originally pegged construction to begin in September, but decided to delay work by a couple of months due to additional geotechnical assessment and surveying.
Geotechnical assessments are often needed to identify the type of earth that exists below the ground. Once complete, that data will support design work of the gigafactory.
These developments follow the July announcement from TSMC, a Taiwan-based semiconductor company, to push back the opening of its Arizona chip factory until 2025 due to labor issues, said Mark Liu, TSMC chairman. Labor shortages, combined with COVID-19 surges and licensing problems, had already caused a three to six-month delay on the $40 billion project.
These construction pauses come at a time of historic reshoring of American manufacturing, spurred by the $52.7 billion CHIPS Act and $485 billion Inflation Reduction Act, both signed into law by President Joe Biden in August 2022.
While the causes for delays on these projects are varied, experts say they mainly boil down to two broad categories: the challenge in finding workers, and the glacial permitting process required to build these structures safely.
Specialty labor shortages
Multibillion-dollar manufacturing projects require special construction techniques, including sophisticated electrical work or the need for “hyper clean spaces” that differ from typical construction projects, said Brian Turmail, vice president of public affairs and strategic initiatives at Associated General Contractors of America.
But that degree of speciality is slowing completion schedules down as projects search for qualified labor.
About two-thirds of contractors reported many construction worker candidates lacked the skills needed to be employable, said Stephen Sandherr, AGC CEO.
“Unless federal officials begin to narrow the funding gap between college prep and career training the construction industry will continue to struggle to find workers,” said Sandherr. “It is great that federal officials want to invest in construction projects, they also need to invest in construction workforce development.”
The report, based on a survey of manufacturers, also called for permitting reform to help streamline the construction process.
Nearly three-quarters of survey respondents said that permitting reform — which would simplify and speed up the approval process for new projects — would be helpful to their manufacturing company, allowing them to hire more workers, expand their business or increase wages and benefits.
Amazon plans to invest $3.5 billion to establish new data centers in New Albany, Ohio, according to a press release shared with Construction Dive.
The new data centers will support computer servers, networking equipment and the AWS technology, while the increased tax revenue from the expansion will support schools, essential services and infrastructure investments such as local parks and roads, according to the release.
The investment in New Albany marks the initial part of Amazon’s $7.8 billion commitment to expand data centers in the state, which was first announced by Ohio Gov. Mike DeWine and Lt. Gov. Jon Husted in June.
Amazon is not the only tech giant to identify New Albany as an up-and-coming data center hub.
Google also announced in August a $1.7 billion investment into its three Ohio data center campuses, one of which is in New Albany. The tech company selected the site due to its ample land, water supply, low natural disaster risk and aggressive tax incentives.
Major data center operators and hyperscalers, like Amazon and Google, continue to show interest in the Columbus market, including nearby cities like New Albany, Hilliard, Dublin and Delaware, Ohio, according to a data center market report from Dallas-based real estate services firm CBRE.
Those markets attract data center players because they sit between major developed data center hubs, including Northern Virginia, Atlanta and Chicago.
Additionally, over 50% of the U.S. population lives within 750 miles of Columbus, which is advantageous for clients wanting to build and develop near end users, according to the CBRE report.
Amazon’s data center projects in Central Ohio represent the second-largest private sector corporate investment in Ohio’s history, behind only Intel’s $20 billion investment in January 2022 to build its semiconductor facility.