Wanted: Skilled Labor

Wanted: Skilled Labor

According to the latest numbers from the U.S. Bureau of Labor Statistics, Americans are hard at work. At last count, the total U.S. unemployment rate stood at the low seasonally adjusted rate of 4.5%, unchanged from November and down from 4.9% at this time in 2005. Throughout 2006, the U.S. economy fostered job growth, although the numbers fell just slightly below the long-term monthly average of

According to the latest numbers from the U.S. Bureau of Labor Statistics, Americans are hard at work. At last count, the total U.S. unemployment rate stood at the low seasonally adjusted rate of 4.5%, unchanged from November and down from 4.9% at this time in 2005. Throughout 2006, the U.S. economy fostered job growth, although the numbers fell just slightly below the long-term monthly average of 130,000 new jobs per month, or 1.6 million new jobs per year, experienced since 1989.

In addition, the U.S. construction put-in-place total is predicted to remain healthy. Reed Construction Data, Norcross, Ga., forecasts generous year-over-year increases of more than 4% into 2008. McGraw-Hill Construction is more modest with its 2007 prediction, a slight -1% decline. What this means for both the electrical contracting and engineering fields is there should be plenty of projects in 2007. The bad news is firms may have difficulty finding qualified workers or, if they do, then they'll have to offer higher salaries and better benefits to remain competitive. The imminent retirement of the baby-boomers, an increase in manufacturing jobs for the first time in years, rumors of offshoring design services, and stricter immigration laws may all cause a labor shortage that will begin in 2007 and, ironically, continue as long as the construction industry thrives.

Skilled labor shortage. Among the U.S. Bureau of Labor Statistics' three major subcategories — construction, services, and manufacturing — year-over-year employment growth for construction was the strongest (Map below). After a few tough years in the negative, manufacturing has remained about even at 0%, ironically becoming a source of competition for young workers who might otherwise make a career in the construction field.

Below its peak level of 4.8% in both April 2005 and January 2006, construction came in at a 3% rate in July 2006. Projections show that by the year 2014, the national need for electrical workers will increase to more than 734,000 — more than 78,000 currently employed in the field. Construction employment boasts 7,455,000 jobs, losing 3,000 jobs in December but registering a 0.5% increase over December 2005. Industry analysis surmises that the drop is due to the slowdown in the residential market, which lost 16,000 jobs in December and 100,000 for the year — a rate of -3% for 2006. What keeps the industry healthy, however, is that the non-residential markets were able to add 7,600 jobs in December and 114,000 through 2006, and heavy and civil engineering construction added 5,700 jobs in December and 25,000 throughout 2006, for a rate of 2.6%.

Unemployment in construction, not seasonally adjusted, dropped from 813,000, an 8.2% rate, in December 2005 to 725,000, a rate of 6.9%, for December 2006 — the lowest total rate for December since 2000. Jim Haughey, Ph.D., chief economist for Reed Construction Data, says the majority of the 700,000-plus unemployed workers comes from the slow residential market. In its 2007 forecast, Reed predicts 120,000 new construction jobs in 2007, which is 30,000 fewer than in 2006.

However, there will be fewer candidates vying for those jobs, as the size of the 20- to 24-year-old male group continues to decline slowly throughout 2007, reduced by stronger immigration enforcement and hiring by manufacturers and motor carriers.

“There will be a skilled labor shortage,” Haughey says. “Wage rate gains have lagged the economy in non-residential and heavy construction markets but will accelerate in 2007. This will spread to non-union as well.”

Some specialized skills, such as estimating, designing, wiring, and heating and ventilation, may be transferable from the home-building sector to non-residential projects, but not all firms have the labor power needed to take on the larger projects. “Not all subcontractors have the size or scale to work commercial projects when residential projects dry up,” says Ken Simonson, chief economist for Association of General Contractors, Arlington, Va. “Most non-residential construction people say the labor market is tight. Contractors may have trouble getting bids from subs, especially in busy markets and areas. The subs could be calling the shots.”

New recruits. “My biggest problem is the baby-boomer population,” says Richard Dressel, business manager for IBEW Local 164 in Paramus, N.J., admitting 2007 and beyond may not be worry-free. “We're going to lose about 500 qualified journeymen electricians in the next five to six years, and they're hard to replace,” he says. “You have to go through recruitment.”

To reach a younger audience, IBEW Local 164 has aligned itself with the high school community in neighboring counties. It has several recruiters on staff promoting the possible benefits of alternatives to college.

In this day and age, that can be a difficult point to get across. “Having been a member of the workforce investment board in Bergen County, I got to see that every one of these school superintendents — no matter where they are in the country — love to go back to the PTA and say ‘89% to 92% of our high school graduating class is going on to higher education.’ But then in two years, 50% is back. We are a distinct alternative to that. These young people make a very good paycheck, and they're getting an education that they can't get anywhere else.”

The Local also holds open enrollment for applications every Friday morning. Applicants are encouraged to apply by bringing in a copy of a diploma or GED; a transcript showing one year of algebra successfully completed, as per the Department of Labor regulations; and a copy of a driver's license or birth certificate. A drug and physical also are required.

“It's somewhat of a lengthy process,” says Dressel, noting that around 200 individuals apply every quarter.

Engineering enrollment. A leading indicator for non-residential construction, employment in architectural and engineering services rose 4,600 in December and 65,000 throughout 2006 for a rate of 4.9%. While the labor pool for the electrical engineering field may remain healthy in 2007, some engineering programs are quickly running short on students. Some industry experts say it's only a matter of time before the decline in engineering programs hits the real world (click here to see Table 1 and Table 2). Rumors of jobs being offshored, as well as the perception that engineering is difficult or uninteresting, have discouraged students from entering programs. Tighter requirements for visas and more investment in engineering programs abroad also have cut into foreign student enrollment in American schools.

“The decline is real overall,” says Richard W. Heckel, Ph.D., founder and technical director, Engineering Trends, Houghton, Mich. Heckel cites numbers from the Engineering Workforce Commission (EWC) regarding full-time undergraduate enrollment for electrical engineering. The last peak was in fall 2002 with 62,448 students. “From that point on, there was a slight drop of about 1,000, and then about another half-thousand,” Heckel says. “Then, in fall of '05 it was 55,969. From '04 to '05, there was a big drop — almost 6,000 enrollment.”

Freshmen enrollment in electrical engineering was at its peak with 12,883 in fall 2000. By fall 2005, the number of freshmen enrolled in electrical engineering programs had fallen to 10,529. However, undergraduate program enrollment always rises and falls in cycles. “It depends on the students' perception,” Heckel says. “Many of the students who study engineering in this country do it in terms of personal financial reward. Only if it looks like personal financial reward will they pick engineering. If they think that times are tough for engineers, then they will go elsewhere. If they perceive that biology and the social sciences — the qualitative fields — are more interesting, and that the money in engineering isn't going to be there, they pick the ones that they'll have the fun with.”

Another negative impact on the perception of the number of engineering jobs in the United States is the rumors surrounding offshoring. Regardless of the number of actual jobs sent overseas, when the media reports on it, the number of enrollments in engineering continues to decline, says Heckel. “Every time that comes up, the parents of high school students in their sophomore and junior years will look at this and ask, ‘Should I recommend engineering to my son or my daughter?’” he says. “A lot of these stories come out looking like there aren't going to be any more jobs for U.S.-trained engineers. That's not the case, but a lot of times the stories come out looking like that. This is going to keep hanging on these people trying to make these decisions of whether they're going to study engineering. When people keep getting bombarded with information about offshoring, they hear about plants closing, and we have very little that shows up in the news as new engineering achievements these days. There's no counterbalance to these offshoring rumors. What's going to have an impact as well is whether U.S. companies are going to go on campus and try to hire this upcoming graduating class.”

Company-sponsored training. Not all engineering training programs are seeing declines in enrollment, however. “I definitely see some movement in the electric utility industry to bring young engineers up to speed,” says Keith Stanek, professor, Department of Electrical and Computer Engineering, University of Missouri-Rolla (UMR), Rolla, Mo. “Just from that, I can imagine that these companies must be adding a lot of new people that they feel require training.”

Stanek's distance and continuing education program at UMR, in conjunction with Cooper Power Systems, provides electrical power engineering courses for engineers and technicians needing a refresher course in electrical engineering. Currently, 16 workshops are scheduled for 2007, which already outnumbers the workshops given during 2006. “I think we did 13 workshops this year,” Stanek says. “If we keep getting calls from companies that want workshops, we may wind up doing twice as many next year as we did this year.”

On average, there are 20 students to a workshop, but sometimes class size can climb to as high as 30 or 35 participants. The program offers two types of workshops: open registration and company-sponsored. “We've already gotten a dozen company-sponsored workshops for next year,” Stanek says. “We've never really had that many workshops scheduled for the following year before the year even began. There's definitely a different climate for training young engineers in the utility industry than there's been in the last couple of years. I worried about the program a couple of years ago, but we had a good year in 2006, and 2007 looks like it's going to be really outstanding.”

Building bridges. In the not-too-distant future, overcoming worker shortages may not be a matter of hiring more warm bodies. With roots in the automotive and aerospace industries, Building Information Management (BIM) — the creation and use of coordinated, internally consistent, computable information about a building project in design and construction — may be able to help electrical engineering and contracting firms cut lead times and increase efficiency to make up for any labor shortfall. During the housing industry's labor and materials crunch, many firms turned to technology to streamline their processes. They discovered that including other collaborators, such as the owner, builders, and suppliers, sped up lead time and increased efficiency. In addition, those shifting to a “paperless” office decreased turnaround time.

Traditionally, the separate nature of the construction industry — several contractors sharing a project — has discouraged the adoption of BIM processes. However, recent breakthroughs in 3-D technology and a more collaborate environment fostered in many firms have shown that BIM's virtual design may be the future of construction.

“The workflow involves a lot of people who used to have problems getting the information they need,” says Jonathan Knowles, global collaboration strategist for Autodesk Collaboration Solutions, San Rafael, Calif. “The reality is that there are a lot more people who can take advantage of this if we use the BIM.”

Knowles' firm is currently concentrating on open-source technologies that make information — more than just the picture of the design but also the project schedules, payment plans, and materials lists, etc. — more accessible to all parties in the process, including what he refers to as “downstream users,“ those not traditionally in the information loop, particularly at the design and planning stages.

The construction industry is notorious for being resistant to sharing information and also to adopting new technologies, says Knowles. The shift from the drafting board to the computer didn't happen until the 1980s.

Currently, only 28% of architectural firms have ever used virtual design/BIM in the design of a construction project, according to a recent survey from The American Institute of Architects (AIA). Although larger firms are more likely to have used BIM, only 58% of firms with annual billings of $5 million or more, compared with 20% for firms with billings under $1 million, and 26% for firms with billings between $1 million and $5 million, have used BIM. Only a third of firms plan to increase their use of virtual design in 2007.

Proponents of the 3-D (simultaneous) process say that the traditional, or sequential, process takes too much time, doesn't engage all team members, is prone to errors and omissions, and causes uneven performance metrics. “You can't be off by a bit when you're building a building,” says Knowles.

A few paradigm shifts in the construction industry must take place before the 3-D process may be implemented, says Scott Simpson, FAIA, CEO and president, The Stubbins Associates, Cambridge, Mass. The staff engagement must move from silos to teams, which then must work in 3-D in cyberspace instead of on paper. In addition, there will be shared risk management and an attitude of cooperation instead of contention. Architects, designers, and builders will be working in a 3-D environment where objects take the place of lines and arcs.

This “brave new world,” according to Simpson, will comprise a total BIM environment, with early engagement of subcontractors and suppliers, the elimination of bidding, no more shop drawings or RFIs, no cost escalation or punchlists, and online payment of requisitions.

It is these changes that make BIM requirements seem prohibitive to a number of firms. In answer to the AIA survey question of when they believe virtual design will become de rigueur for building design, less than half answered that it will happen within the next five years, and only an additional 41% predict it will happen within five to 10 years. When asked to give the greatest obstacle to increased use of virtual design, almost a third cited that clients don't require it and aren't willing to pay for it. A quarter of firms reported that the industry isn't ready for it yet and that integration is too difficult. Other reasons cited for not adopting BIM are that the architects aren't trained to use it effectively (17%), too expensive to implement (13%), and rewards don't match the risk (6%).

But to combat a labor shortage, BIM may be the perfect solution. The 3-D model is very specific to construction. It bridges gaps in locations, culture, and expertise. According to Knowles, 3-D comprises the parameters, functions, elements, geometry, materials, and surfaces that make up a visual lexicon, syntax, vocabulary, and expression that can communicate from and function without words. Team members can work on the same project from across the desk, state, city, or world.

“3-D provides a method by which we can universally communicate,” Knowles says. “It's the way we think.”

Sidebar: Adds, Moves, and Changes

Richard Dressel, business manager for IBEW Local 164 in Paramus, N.J., is looking forward to the amount of work his Local has on its plate this year. Meadowlands, a $1.3-billion mixed-use complex, which will include office and retail space, as well as a new New York Giants stadium are just a few of many projects getting started in the New Jersey area.

According to Dressel, contractors shouldn't be too concerned about finding enough qualified workers for these projects. “We've been faced with this in the past, and we've been able to handle it,” Dressel says. “When it starts getting real busy, we have a built-in labor pool.”

To fill the open jobs, the IBEW uses what it calls “travelers,” who are union members who travel from their home Locals to sign up on the “out-of-work” list in areas where jobs are more plentiful. “The last time, about five years ago, besides our own membership we had 2,000 travelers working in our jurisdiction,” Dressel says. “The system works.”

The benefits for traveling workers are reciprocated back to the their home Locals, so there's no break in coverage for health care, pension, or even an annuity plan. “It all goes directly back after we collect it here,” Dressel explains. “It's very advantageous for that traveling member.”

Hoping to attract workers who may not want to stick strictly with electrical work, Dressel's Local also runs a teledata division, which is actually the largest in the country for construction telecommunications work. Here, workers learn how to handle the “moves, adds, and changes,” that occur with data and phone after the building has been constructed. Often, these skills are transferable from project to project, whether in housing or non-residential markets. Dressel's Local has more than 400 signatory contractors, 180 of which are teledata contractors.

Sidebar: Foreign Exchange

The United States isn't the only country dealing with a shortage of electricians and electrical engineers. Industrialized nations across the globe are gearing up for shortfalls as the age of skilled workers increases. Germany, Austria, Belgium, Finland, and the United Kingdom have all reported a lack of skilled electricians, with an estimated 37,000 vacancies in the United Kingdom alone. Industry experts in Canada predict that most of that country's electricians will retire within the next 10 years. In Australia, the number of skilled tradespeople has become so small that it is now the No. 1 obstacle to business investment, says a recent survey by the Australian Chamber of Commerce and Industry.

Enrollment in U.S. schools for engineering as a whole, not just undergraduates, is on the decline. The number of Ph.D.s awarded to U.S. citizens this year is about the same as it was four decades ago, while the population has grown by a third. “U.S. citizens have shown to be not very much interested in graduate education,” says Richard W. Heckel, founder, Engineering Trends, Houghton, Mich.

The drop in enrollment in U.S. higher education may also be traced to the decline in the number of foreign nationals interested in U.S. graduate programs. “The biggest effect is through the foreign national because that was the biggest group in the engineering colleges. The engineering colleges have grown research wise, significantly through graduate programs that brought in foreign nationals both at the Master's and the doctorate level.” The concern will be if this trend continues.

TAGS: Construction
Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.