3Q Cost Report - Worker Gaps in South Push up Costs
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| Photo:� Greg Pickens - FOTOLIA |
Keeping construction projects staffed in fast-growing southeastern states has never been easy. But that is proving tough now, and could be a lot tougher later, with still unmet building needs from recent hurricanes and demand for craft labor to meet industrial growth plans in the region, particularly in power. That is translating into higher labor costs for crafts and other skills.
Owners already affiliated with Cincinnati-based Construction Users Roundtable began to realize their looming labor shortage situation in 2005, based on research by Birmingham-based utility Southern Co. It hosted a forum last October, initiated by the Associated Maintenance Contractors and the AFL-CIO’s Building and Construction Trades Dept., to discuss a problem that no longer could be ignored.
Evolving from that initial gathering is the Southeastern Manpower Tripartite Alliance, an “informal” coalition of industrial owners, contractors and labor organizations formed to study the region’s craft labor numbers and find ways to “mitigate risks” of shortages, says Edward L. Clayton, SEMTA co-chairman and Southern Co. outage planning manager. The group, which he says “represents both union and nonunion interests,” will meet Oct. 3 in Charleston, S.C.
Related Links: Two punishing hurricane seasons in 2004 and 2005, causing an estimated $150 billion in damage to Florida and the Gulf Coast, exponentially escalated regional construction needs. But the fast-growing area also needs power and other facilities. “It’s everything—factories increasing their production, powerhouse work—everything seems like it is coming at one time,” says Kevin Wallace, co-chair of SEMTA and president of the ironworkers’ union southeastern states district council.
The open shop has long had an advantage in southern construction. But shortages are generating change in labor choice, with owners willing to pay union scale to acquire critical skilled labor. “There are some contractors entering into local labor agreements with unions to ensure that they can staff projects,” says Clayton. “Owners such as chemical plants, where we haven’t been in 30 years are opening up to us,” adds Wallace.
A clearer assessment of projected shortages could come at SEMTA’s Oct.3 meeting. Robert M. Gasperow, executive director of the Construction Labor Research Council, Washington, D.C., will provide data on craft labor demand in the region through 2010, based on information from 50 major owners that participated in a work force survey. “It will quantify and substantiate people’s concerns,” he says. “Putting data together is the first step.”
U.S. craft shortages are starting to push up union wages and fringe benefits. CLRC’s analysis of 164 collective-bargaining agreements so far this year, covering about 198,000 workers, shows first-year increases averaging $1.87 an hour, or 4.8%. That compares to $1.68, or 4.2%, last year. Second and third-year increases in 2006 are closer to those of last year.
Gasperow sees greater geographic differences this year, with the 19 settlements in the southwest Pacific region averaging a 5.6% first-year increase. Compared to 2005, negotiations resulted in a smaller increase in the East North Central region and large increases in the Middle Atlantic, according to CLRC. Among selected crafts, only laborers exceeded the average, reporting a 5.5% first-year hike.
The demand for labor is closing the pay gap between union and nonunion craft labor on the Gulf Coast. “Wage increases are going up faster on the Gulf Coast than for the rest of the U.S., says Jeffrey M. Robinson, president of PAS Inc., Saline, Mich., which surveys nonunion craft labor rates. He says the annual escalation rate this year has been 6 to 8 to 10% and even 12%, depending on the area.
“The industrial sector is where the largest number of folks are needed,” says Robinson. Even before the storms in 2005, projections showed that 40% more craft workers would be needed for new construction, he adds. Nonunion boilermakers are one example. In Houston, they currently are receiving an hourly weighted average of $19.87 in wages only. In Baton Rouge, the rate is $23.64. Robinson expects that the rate in Houston will rise as it competes for labor.
Nonunion workers also are receiving hefty incentives and per diems that are not included in the average rates. In May, the per diem for nonunion workers on industrial, commercial and institutional projects was averaging $46 in Texas, $51 in Louisiana and $60 along the Beaumont/Baton Rouge industrial corridor, says PAS.
Incentives on Gulf Coast industrial jobs currently are averaging $1.25 per hour for project completion, $1 for productivity, $1.83 for attendance and 57¢ for safety. “Some firms have all four,” says Robinson.
| Construction Employment’s New Record Construction employment is running well above last year’s record high. The Bureau of Labor Statistics estimates that 7.8 million white collar and blue collar workers were employed in the construction last August, 3% more than a year ago. Most of the employment growth was in the nonresidential building sector, where employment increased 3.4%. Specialty contractors were the largest employer with 5 million workers on their payroll, 2.6% more than a year ago. The industry’s unemployment rate was 5.9% last August, slightly above the 5.7% a year ago but well below the recent high of 7.4% in 2002. |