December 19, 2017
Productivity and the Construction Labor Shortage
Most people are aware that there is a very significant labor shortage in the construction industry; this has been a major issue since the 2008 recession. According to a recent report by CBS News, for every skilled worker entering the workforce, there are five who retire. A 2017 survey of career-minded young people found that only three percent were interested in the construction trade.
Robert Dietz, chief economist for the National Association of Homebuilders advises, “The challenge right now is that we simply do not have enough people who are ready and willing and able to join the construction industry.”
One of the disturbing factors in this labor shortage situation is that nearly everything we read and hear is focused on attracting more people into the construction trades, with no focus on a key critical element: productivity. Where productivity is mentioned, the major focus is on technology – not people.
During the 1970’s and 1980’s, the United States appeared to have sufficient labor to handle the manufacturing business. The issue was competition, particularly foreign competition from Japan, where they recognized the importance of improving productivity utilizing the Toyota Production System; today what we call Lean. This allowed them to focus on increasing the utilization and efficiency of the workers performing the value-added work that customers pay to be completed. Adding more labor would have increased cost, putting most companies out of business. The choice was “get Lean” or disappear.
Today, we have a construction industry that has not increased productivity in more than 40 years (in fact, many reports show a decline), while manufacturing productivity has increased more than 100 percent. It doesn’t take much to understand that the age-old construction approach to getting more done – add more people – is NOT the key solution for the future. Yes, we need to utilize technology tools, and yes, we need to continue to encourage young people to enter the construction trades, but we are faced with the same situation we experienced in manufacturing; get Lean and focus on improving productivity, or disappear.
How do we do that? At Faith Technologies, we have fantastic programs that include providing monetary incentives for employees who bring in referrals, providing full tuition for our apprentices to learn the trade and quickly become fully licensed electricians, and focusing on increasing prefabrication of assemblies to reduce on-site labor.
Most importantly, we engage our people in the decision-making process. This begins with a robust productivity program that recognizes the key to improving productivity is to provide full support to our skilled electricians, so they maximize their time spent on the value-added work our customers pay us to complete. Since we began the program in 2009, we’ve seen a 62 percent increase in productivity. We have and will continue to decrease the labor required to complete our projects, maintaining our best-in-the-business performance.
Why do we do that? Just as we experienced in manufacturing, there is no choice. Manufacturing had to reduce costs to be competitive and survive. Construction must also be more productive and reduce labor to survive.