The continuing challenges of scarce workers and materials—and still-escalating material costs—are not going to go away anytime soon. That’s the current sense of the Southeast construction market as explained to ENR by some of the region’s specialty contractors.
As Chris Williford, president of Wilson, N.C.-based SPC Mechanical, this year’s 14th-ranked Top Specialty Contractor, said bluntly: “We do not see these issues going away in the foreseeable future.”
Keeping in mind that specialty contractors are often the firms most directly impacted by the twin lingering workforce and materials crises, their collective opinion is that these issues could very well continue into 2022. And we will be talking about them all next year.
On the recruiting front, firms contacted by ENR noted that they are trying different approaches to finding new workers, but with limited success.
“Labor is a big problem for everyone and will be a center of focus for us in the foreseeable future through 2022,” says Vann Cleveland, vice president of business development with Atlanta-based Cleveland Electric, this year’s No. 6-ranked specialty firm. More clearly, Cleveland adds, availability of labor and materials will without doubt be the firm’s “biggest concerns through 2022.”
The big bounce back in terms of new project pursuits—notable across the entire Southeast region of Florida, Georgia, the Carolinas, Alabama and Tennessee—is compounding the problem, with the project sectors of water treatment, health care, research labs, process industrial and “especially data centers” leading the way, Cleveland says.
In addition to Atlanta, Cleveland is seeing what he terms as “strong activity” in northern Alabama, the Tennessee cities of Chattanooga and Nashville as well as in Savannah, Ga., and Charleston, S.C. And the labor shortage is a problem in each locale, he says.
“We are working 1,000 electricians now but could almost double that if we had the electricians,” he says. “We are extremely focused on what opportunities we consider, when they start and the expected schedule.”
In North Carolina, SPC’s Williford strikes similar notes, stating that the Tar Heel State’s construction market is “very hot,” with most project sectors busy but health care and life sciences seemingly the hottest.
However, Williford says, new employees are proving “very difficult to find.” The firm has taken the step of increasing the value of referral bonuses it offers, but that isn’t solving the problem. “The scarcity of talent is affecting our ability to grow.”
Tampa-based wall/ceiling contractor KHS&S recently completed work at the Caribe Royale Orlando Convention Center hotel expansion project.
Photo courtesy KHS&S
Materials Prices Still Shifting
In Atlanta, the Southeast’s largest metropolitan construction market, project activity is similarly robust. And the concurrent problems of workforce and materials are proving commensurately challenging, says Mike Dominici, executive vice president with Atlanta-based wall-and-ceiling contractor The Circle Group.
Overall, he says, the Southeast construction industry is being fueled by a “widespread, robust housing market and corporate relocations into the region.”
Additionally, numerous “large-scale mixed-use developments are well underway or in the late planning stages” in Atlanta, Nashville, Miami and other cities.
“There are plenty of opportunities for contractors,” Dominici says, such as in the multifamily market. Some of those opportunities may disappear, though, he adds, due to the “unprecedented material price increases and skilled labor shortages that continue to put upward pressure on pricing.”
Specific to the materials that Circle Group employs, such as metal framing, “price increases for our trade have hit unimaginable record levels,” Dominici says.
Overall, he adds, “Prices for all products continue to rise with no relief in sight for the remainder of this year and into 2022 as we continue to receive hefty escalators for virtually all products.”
The material prices problem will likely continue until at least “some point next year,” Dominici says, admitting that “there is no definitive timeline” for a return to normal.
As a consequence, specialty contractors are using every tool at their disposal. Williford, with SPC, says, “We are equally as concerned about material availability and pre-purchased a significant amount of pipe material to insure we could meet project schedules.”
Across the Southeast, the demand for new data centers, such as this facility in Atlanta, is fueling plenty of construction activity.
Photo courtesy Cleveland Electric Co.
About the Ranking
ENR Southeast’s Top Specialty Contractors ranking lists firms’ 2020 revenue figures earned from projects located in the Southeast. In addition to revenue, the main ranking includes information about each firm, such as top markets and largest recent contracts. Breakout lists rank firms based on state-by-state and market-sector revenue.