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U.S. Atlantic Mid-West Region Labor Market Analysis, 2013 - 2017

SPRING 2013

Nat

ural

Gas

Util

izat

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Tomorrow:Economic Growthand Jobs

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Construction Labor Market Analyzer®: An Overview

Executive Summary

20/20 Foresight Report, Spring 2013

Macroeconomic Summary

Key Macroeconomics Indicators & TrendsGross Domestic Product Construction VolumeConstruction Employment Unemployment & Labor ForceChallenging DemographicsNatural Gas & Trends in Shale DevelopmentImpact of Gas Trends on Labor DemandThe Atlantic Mid-West United States

Construction Labor Market Analyzer®

Construction Volume Labor Demand Outlook Craft Outlook Conclusion

Workforce Planning: Risk Management for Successful Projects

AppendicesAppendix A: 2013-2017 Skilled Labor Demand by Craft (All Projects): United States

Appendix B: 2013-2017 Skilled Labor Demand by Craft (Industrial Projects): United States

Appendix C: 2013-2017 Skilled Labor Demand by Craft (All Projects): Atlantic Mid-West

Appendix D: 2013-2017 Skilled Labor Demand by Craft (Industrial Projects): Atlantic Mid-West

Appendix E: 2013-2017 Skilled Labor Demand by State: (All Projects): Atlantic Mid-West

Appendix F: 2013-2017 Skilled Labor Demand by State: (Industrial Projects): Atlantic Mid-West

Appendix G: State-by-State Demand/Supply Rankings

Appendix H: CLMA® Craft Titles & Definitions

Report License Agreement

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TABLE OF CONTENTS

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OVERVIEW: Construction Labor Market Analyzer® (CLMA®)

• Project planning and scheduling

• Project risk, contingency and labor cost management

• Modularization and prefabrication decision-making

• Contracting strategy

• Marketing strategy

• Human resource planning

• Industry recruitment strategies

• Training and curriculum planning and development

www.myCLMA.com

Recommended uses for this report:

The Construction Labor Market Analyzer® (CLMA®) is designed to significantly improve the value and reliability of labor market data, and allow users to have comprehensive, confidential, reliable, real-time labor scenarios at their fingertips. The model collects capital and maintenance project demand information and craft labor supply data from the following sources and makes it available to industry stakeholders in a confidential way to improve how we understand and respond to critical workforce pressures.

Industrial construction data (power generation, petro-chemical, manufacturing, process, etc.) is input and managed directly by owners, and the craft requirement data of those projects is provided by the owner, or through the Project Labor Forecaster®.

Non-industrial construction data (heavy civil, stadiums, office buildings, schools, water/sewer, warehouses, etc.) is imported from the McGraw-Hill Construction Dodge database. The Project Labor Forecaster® calculates the craft requirement data.

The CLMA® does not collect or report on residential construction projects.

Labor (supply) data in the CLMA® is input by each individual contractor, union and labor broker from their payroll records or other employment rolls and is designed to prevent duplicate reporting for union workers on contractor payroll. The CLMA® also reports U.S. Department of Labor, Bureau of Labor Statistics data.

http://www.construction.com/dodge/

http://www.myCLMA.com

www.myCLMA.com

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20/20 Foresight Report ©2013 | U.S. Atlantic M

id-West Region | Spring 2013

ATLANTIC MID-WESTREGION

EXECUTIVE SUMMARY

Tough choices – recession, recovery, significant expansion, or collapse. Though the nation is presently in its fourth year of economic recovery, uncertainty continues to permeate the economic outlook. Factors impacting the economy are working in completely different directions, including positives such as an ongoing energy boom, stable industrial production, corporate profitability, a booming stock market, active consumers, job growth, low interest rates and a rapidly improving housing market; and negatives such as sequestration, higher taxes, unpredictable energy policies, lack of clarity regarding the impacts of the Affordable Care Act, weakness in Europe, provocations from North Korea, instability in the Middle East and stubbornly high unemployment.

For now it appears that slow and steady is the new normal. Still, the pullback in government spending, including in the form of public investment, continues to threaten near-term economic growth, especially if the stock market begins to give back some of its recent gains. That said, business fundamentals remain strong and corporate profitability remains lofty. With a considerable level of cash on hand, banks certainly have the capacity to lend more and corporations have the capacity to borrow and invest more, but will they?

All of this will shape the trajectory of activity within the nation’s construction sector, which is particularly susceptible to economic vicissitudes. Since nonresidential construction activity tends to lag the state of the economy at any given moment, the implication is that since the U.S. economy has continued to expand slowly since the end of the Great Recession in June of 2009, nonresidential construction activities will also continue to recover only gradually. The residential component of the industry, however, follows a much different timing cycle, and is presently in the midst of what appears to be a reasonably well sustained, surprisingly brisk expansion.

Interestingly, it’s not even clear whether construction can handle a vigorous expansion cycle. The industry was arguably harder hit than any other during the Great Recession, resulting in many projects that had been in the development pipeline to be postponed

or canceled, leaving many workers, including those of specialty trade contractors, without jobs. Facing prospects of long-term unemployment, many workers left construction for industries that were either less impacted by the Great Recession or which began to recover on a more timely basis, including retail, distribution, assembly and a myriad of service categories. At the same time, many young people have eschewed the industry, considering it to offer less glamour and to be associated with high rates of unemployment. While the construction industry probably should have used the downturn as an opportunity to retrain workers and to improve its image among young labor market entrants,

the industry merely licked its collective wounds, leaving open the possibility of large skills shortages in the future.

In certain business segments and geographies, that future has already arrived. Today, as the development pipeline once again expands, the industry is confronted with an insufficient pool of experienced labor; a pool that will be further diminished as an estimated one-sixth of the construction workforce ages and retires in coming years. For rapidly expanding segments such

as oil and gas, the lack of sufficient numbers of skilled workers threatens industry expansion and therefore the broader U.S. economy. Widespread staffing concerns have already developed among contractors and owners and while some may be forced to abandon projects, others may choose to settle for rising costs in order to compete for labor. Unless proper training and efforts to refill the skilled labor pipeline are put into place, these difficulties will only be exacerbated during the years ahead and efficient project execution will be challenging. More than ever, prudent planning is essential.

The nation’s nonresidential construction labor force currently stands at between 4.5-5 million, down from an estimated 6 million prior to the Great Recession. Upwards of five million skilled workers will be in demand toward the end of this year for planned industrial and non-industrial projects as estimated by the Construction Labor Market Analyzer® (CLMA®). Furthermore, with the CLMA®’s five-year pipeline valued at $2.3 trillion (including an industrial pipeline of $542 billion), a peak of more

An estimated

one-sixth of the

construction

workforce will

age and retire in

coming years.

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IL - IN - MD - MI - NY - OH - PA - WV - WI

than 6.8 million workers will be needed by 2017. All key trades are facing rising demand and without an increase in the supply of available craftsmen, a deficit of at least two million tradesmen will quickly emerge. And with further demands for skilled labor from the oil and gas industry, coupled with an anticipated “industrial boom” that has not yet been fully captured by the CLMA®, the realized shortage may be greater.

Until recently, energy production was associated with states such as Alaska, North Dakota, Texas, Louisiana, and Oklahoma. Today, however, new technologies and discoveries of the Marcellus and Utica shale formations has led to large-scale oil and gas development in the Mid-Atlantic and Mid-West regions. Also in these regions, renewed interest in American-made goods and other factors has resulted in a strengthening manufacturing sector. As such, the “Atlantic Mid-West” will likely see further gains in construction activity. In fact, the CLMA®’s current project database suggests that the Atlantic Mid-West states will see an estimated $518 billion in total nonresidential construction activity during the next five years. States such as New York, Illinois, Ohio, and Pennsylvania should be particularly active, with oil and gas development to drive much of it in Ohio, Pennsylvania, and West Virginia. And elsewhere in the Atlantic Mid-West, growth in manufacturing and related industrial sectors should fuel future growth.

New York has seen (and will continue to see) a rise in its construction market share within the region with $157 billion in planned nonresidential construction activity anticipated for the state through 2017, according to the CLMA®. Elsewhere, growth is evident in Pennsylvania and Ohio also which are each expected to see upwards of $60 billion in project volume during the same period. These states will likely be among those to see the greatest demand for labor in the coming years. In fact,

the CLMA® estimates a need for nearly 300,000 workers in New York; and in Ohio and Pennsylvania, labor demand is projected to peak at 224,000 and 210,000, respectively. Regionally, an estimated peak demand of 1.5 million workers will develop in the Atlantic Mid-West within the next five years, which will likely escalate further as the CLMA®’s database grows. However, with sub-par population growth and a slowly expanding construction workforce in the Atlantic Mid-West, there is concern that there will be an insufficient supply of workers to accommodate the rise in demand.

There was a time when low prices and bids determined who the most successful contractors would be. While cost and price will always matter, the future of competition will increasingly be along the dimension of human capital. Owners and contractors need to consider this dimension carefully as they attempt to maximize profits and/or minimize costs. Thankfully, a better way to plan is available through the CLMA®, a revolutionary solution that marries planned industrial and non-industrial project data with specific demands for skilled craftspeople and available supply. This represents an increasingly important aspect of the construction industry’s

managerial toolkit.

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SPRING 2013 20/20 FORESIGHT REPORTAtlantic Mid-West Edition

Macroeconomic Summary

Slowly, but steadily the U.S. economy continues to expand, fueling moderate, restrained growth in construction activity. While recent spending cuts in the public sector have tempered overall progress, signs suggest an active and strengthening private sector is emerging, with manufacturing and energy development driving much of it. Is the construction industry ready to embrace the opportunities and workforce challenges that lie ahead?

During and immediately following the Great Recession, which officially began in late 2007 and ended in mid-2009, construction activity throughout the nation plummeted. The housing market suffered a severe setback during the initial years and nonresidential quickly followed suit, with steep declines occurring most notably in 2009 and 2010. Throughout this time, numerous construction projects were delayed or cancelled and hundreds of thousands of workers found themselves jobless. With the prolonged period of inactivity, many lost hope and became disgruntled, driving them toward retirement or employment in other, more stable industries. This left the construction sector with a smaller labor force, which, at the time, sufficiently served the wilted development pipeline. More recently, however, demand has been expanding, driven by private sector growth in areas such as energy, manufacturing, and lodging. During the initial years of the recovery, however, the construction industry failed to seize the opportunity to replenish its supply of skilled workers and today, the labor market remains weak and staffing difficulties are beginning to emerge in many areas, with some contractors unable to efficiently execute projects due to worsening labor shortages and rising labor costs. With further strengthening of the private sector ahead, the construction industry will need to undertake prudent planning to ensure successful project development and management.

The Construction Labor Market Analyzer® (CLMA®) is a state-of-the-art tool that has been designed to assist owners and contractors precisely with this issue. Its database of industrial and non-industrial projects, coupled with its ability to identify future staffing needs, is and will continue to be an invaluable tool in the planning and management of labor requirements for the nonresidential construction market.

Key Macroeconomic Indicators & Trends

According to the U.S. National Bureau of Economic Research, the U.S. economy officially entered into a recessionary period in December 2007, where it remained for nearly two years (June 2009). During this period, spending and investment plummeted, causing a significant slowdown in construction activity in the years that immediately followed. With construction volumes down, the construction labor force dwindled as younger workers left the industry in pursuit of available positions in more stable industries and baby boomers retired.

Today, economic growth has once again resumed and construction activity has rebounded. While cuts in federal spending and other fiscal headwinds remain threats to near-term growth, particularly within the public sector, long-term growth is anticipated, with the private sector expected to lead the way. Much of this activity will be driven by the oil and gas sector as the industry responds to the abundance of reserves in the U.S. and a growing demand for these resources.

Gross Domestic Product

Gross Domestic Product (GDP) is the output of goods and services produced within the United States and is a widely accepted gauge of economic growth and the overall health of our nation’s economy. As reflected in Table 1, real GDP declined in both 2008 and 2009 on an annualized basis, when the U.S. entered into a recessionary period. Positive growth resumed by 2010; however, at a slower rate than is typical during most post-recessionary years. In the years that immediately followed, a wary business community, tepid job growth, and a weak housing market resulted in anemic spending among both businesses and consumers. Regardless, the economy has proven to be resilient to a number of potential headwinds. Despite political uncertainties, fiscal issues, and international turbulence, GDP has continued to expand, albeit at a slow, steady rate.

More recently, rising confidence among businesses has resulted in a strengthening job market, which in turn has led to an increase in consumer spending

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Table 3Percent Change in U.S. Private Fixed Investment in Nonresidential Structures

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and healthy corporate balance sheets. While GDP growth slowed sharply at the end of 2012 (see Table 2), much of the slowdown was driven by cuts in the public sector. In fact, during the fourth quarter, private fixed investment expanded by 14%, whereas, government spending and investment fell by 7%. By the first quarter of 2013, economic growth strengthened with a 2.5% change in GDP; however, unlike in the fourth quarter, consumers rather than businesses, were behind much of the gain. Consistent with recent trends, government spending and investment continued to fall.

Private Investment in Nonresidential Structures, a component of GDP, illustrates a downturn in private construction activity during 2009 and 2010. However, positive growth resumed by 2011 and surged with a 10.8% annual increase in 2012 (Table 3). Manufacturing, Power & Communication, and Mining led the way and all three posted double-digit growth rates in recent years. As pent-up demand spurs further increases in industrial production and capacity utilization and as the U.S. continues to strive for energy independence, additional growth in investment is anticipated for these sectors during the years ahead. And investment in commercial structures can be expected to follow suit.

While the long-term outlook of construction spending is promising, several near-term threats remain. Construction activity often lags trends in the larger economy and following the slowdown in GDP growth at the end of 2012, investment in structures came to a halt at the beginning of this year. Still, several sectors continued to expand and despite some typical quarterly fluctuations, Manufacturing, Power & Communication, and Mining have driven much of the investment growth in recent quarters (Table 4). It should be noted that growth in Power is often overshadowed by declines in Communication, which can result in volatility within the combined Power & Communication sector. For instance, when investment in Power & Communication structures rose by 9.1% in 2008 and

by 0.7% in 2009 (Table 3), it jumped by 16.9% and 10.6% in the Power category during those years, yet it simultaneously contracted by 5.6% and 23.7% in Communication. (Changes were more comparable in the years that immediately followed.)

Looking ahead, a number of trends have developed to suggest that further growth in GDP will be supported by a strengthening private sector. Corporate profits remain strong, financial markets are up, and the nation’s power sector is booming – with the achievement of energy independence a driving factor. Furthermore, the nation’s housing and job markets continue to improve, which will likely spur additional gains in consumer spending, as well as a revival of the retail and automobile industries. Growth in business fixed investment typically follows these trends and with lower fuel costs and increased interest in “Made in America,” manufacturing is expected to see additional gains during the years ahead.

With the Federal Reserve signaling low interest rates into the foreseeable future and pent-up demand for capital spending, business investment, including investment in structures, should continue to expand. However, the public sector is expected to remain down, with additional political pressures and sequester-induced spending cuts anticipated. These issues, in conjunction with the effects of recent tax increases, will continue to weigh heavily on overall economic growth. Therefore, while the long-term outlook is promising, construction spending may encounter some near-term delays until businesses and consumers adjust to the recent changes put into place by the federal government.

Construction Volume

As noted previously, investment in nonresidential structures plummeted during the economic downturn and after years of disinvestment, solid growth finally returned in 2012. Similarly, total nonresidential construction put in place (i.e., the total dollar value of nonresidential construction work done in the United States), as reported by the U.S. Department of Commerce, declined steadily in 2009, 2010, and 2011. However, as shown in Table 5 and illustrated further in Chart 1, nonresidential construction put in place posted a 7.5% increase in

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Table 2Percent Change in U.S. Real GDP from Preceding Period

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2012, rising from $533 billion in 2011 to $572 billion last year. Private spending led the way and while publicly funded volume continued to fall with a nearly 2% decline last year, private volume soared by more than 17%, with the power, manufacturing, and lodging categories seeing some of the largest gains.

Further cuts in government spending at the beginning of 2013 brought about a contraction in total nonresidential construction activity (i.e., industrial and non-industrial spending combined). As shown in Table 6, there was a 0.4% decline in overall construction put in place during the first quarter of this year, relative to the first quarter of 2012. While private spending continued to post a year-over-year gain and was up 3.3% over the first quarter 2012, the decline in publicly-funded activity worsened, falling by 5.1% year-over-year. Furthermore, despite the year-over-year increase in private spending during the first quarter, a clear slowdown from the double-digit growth encountered last year is evident. A continuation of this trend can be anticipated for the months ahead as the business community adjusts to federal government cutbacks and higher taxes.

Within the nonresidential construction sector, non-industrial activity has clearly made up the largest spending component. However, much of the growth has been driven by industrial development. As reflected previously in Table 5 and illustrated further in Chart 2, the volume of industrial construction put in place surged in 2012, rising by more than $30 billion, or nearly 28%, relative to 2011.

More recently during the first quarter of 2013, while total nonresidential construction volume posted a small, 0.4% year-over-year decline (consistent with the slowdown in economic growth and cuts in government spending), the decline in non-industrial volume was far steeper, falling by 2.1%, or nearly $1.9 billion, relative to the first quarter of 2012. (See Table 6 and Chart 3). In contrast, industrial construction spending, as reported by the U.S. Department of Commerce, rose by $1.4 billion, or 4.1%.

Industrial construction activity reflects spending on projects related not only to Manufacturing, but also to Power. As noted in the discussion on economic growth and investment in structures, Power has been one of the most active categories, posting double-digit gains in recent years. And within the oil and gas sub-categories, nearly $6.9 billion was spent on privately funded buildings and structures for the distribution, transmission, gathering, and storage of natural gas during 2012, while separately, more than $6.7 billion was spent on similar facilities for the distribution, transmission, gathering, and

Table 5Value of Nonresidential Construction Put in Place: U.S.(in millions of dollars)

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Chart 1Total Nonresidential Construction Put in Place: U.S.

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883

709,

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Source: U.S. Department of Commerce

Table 6Value of Nonresidential Construction Put in Place: U.S.*(in millions of dollars)

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Chart 2Nonresidential Construction Put in Place: U.S.

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575,

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437,

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Chart 3Nonresidential Construction Put in Place: U.S.


1st Qtr 2012 1st Qtr 2013

33,014 34,374

88,213 86,355

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storage of crude oil. Furthermore, another $5 billion was invested in privately funded manufacturing facilities associated with the transformation of crude petroleum and coal into usable products. (See Chart 4.)

Comparing the most recent five years to the five years prior, construction spending in these categories experienced significant gains. Specifically, for the five-year period ending in 2012, average spending in construction put in place for the gas, oil, and petroleum/coal manufacturing sectors rose by 46%, 183%, and 543%, respectively, relative to the previous five-year period (Chart 5). These compare to an increase of 13% in total private nonresidential construction spending for the same five-year period.

With the exception of oil and gas, growth in total nonresidential construction activity during the coming months will likely be sluggish, as the effects of a slowing economy and cuts in federal spending continue to impact the construction industry. Regardless, positive trends developing in the private sector suggest that further strengthening can be expected in the years to come, especially in the private investment of power, manufacturing, and commercial facilities. (Further discussion on future construction volume can be found under “Construction Labor Market Analyzer®: Construction Volume & Labor Demand Outlook.”)

Construction Employment

It should come as no surprise that when economic growth plummeted in 2008, employment across all industries suffered and construction was no exception. In fact, it was among the hardest hit industries during the downturn. As illustrated in Chart 6, between 2008 and 2010, more than 900,000 jobs were lost during the three-year period in the nonresidential sector (with an additional 1.2 million jobs lost in the residential sector). Nonresidential hiring resumed in 2011 and by 2012, upwards of 100,000 jobs were added back to the sector. However, a gap of 800,000 nonresidential jobs remained relative to pre-recession levels, contributing mightily to the skilled workforce shortage already in place.

While the rebound in nonresidential construction job growth has been tepid, a clear trend of acceleration can be observed in Chart 7, with annual average employment rising by 1.0% in 2011 and by 2.1% in 2012. And during the first quarter of 2013, the number of nonresidential jobs grew by 2.4% relative to the same three-month period last year, an indication of growing demand for skilled workers.

The 2.1% increase in jobs during 2012 was not evenly distributed within the nonresidential sector. As noted previously, the oil and gas industry was a key driver of construction spending growth. Expansions in oil and gas impact a number of nonresidential construction sectors, including the construction


Gas Oil Petroleum/Coal0

8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000

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Gas Oil0

14,000 12,000 10,000 8,000 6,000 4,000 2,000 (in

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Chart 5Gas & Oil Construction Put in Place: 5-Year Averages

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4,974

Petroleum/Coal‘03-’07 Average ‘08-’12 Average

6,019

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5,977

1,869

12,022

Source: U.S. Department of Labor, Bureau of Labor Stascs

(Tho

usan

ds)

Chart 6Construction Employment: U.S.

Residen�al Nonresiden�al

34,374

0

5,000

4,000

3,000

2,000

1,000

4,40

43,

226

2,81

54,

347

2,24

93,

768

2,03

53,

484

2,01

6

2,04

93,

592

1,97

53,

424

3,51

8

2007 2008 2009 2010 2011 2012 1st Qtr‘13

Source: U.S. Department of Labor

Chart 7YOY Change in Nonresidential Construction Employment: U.S.

0

200,000 100,000

-100,000 -200,000 -300,000 -400,000 -500,000 -600,000 -700,000

0.0%

4.0%2.0%

-2.0%-4.0%-6.0%-8.0%-10.0%-12.0%-14.0%-16.0%

2008 2009 2010 2011 2012 1st Qtr‘13

-1.3%

-56,800

-13.3%-579,200

-7.5%-283,900

1.0%

34,000

2.1%

74,100

2.4%

79,433

11



of roads, rail, pipelines, wastewater facilities, hotels, housing, etc. As an example, employment in pipelines (a heavy and civil subsector) jumped by 14.7% in 2012 (Table 7). This translates into an annual gain of 16,400 pipeline construction jobs, which represents 22% of the 74,100 jobs added to the entire nonresidential sector last year. When other sectors impacted by oil and gas development are also considered, there is little doubt that the oil and gas industry has been a major contributor to job growth, not only in nonresidential construction, but also in the greater economy. In fact, as noted by Sage Policy Group and reported further in the World Economic Forum’s “Energy for Economic Growth: Energy Vision Update 2012,” the oil and gas industry drove the creation of 37,000 direct and 111,000 indirect jobs during 2011, accounting for 9% of total job creation in the U.S.

Looking ahead, as previously noted, there is some concern that the recent cuts in government spending and slowdown in business investment may restrain near-term job gains within the construction sector. However, the labor shortages observed by many contractors today, coupled with growing project volumes, suggest that further growth in the skilled workforce will be essential. With the anticipated increase in private sector spending (spurred by low interest rates and other supportive factors), structure investment and construction employment should see continued expansions during the years ahead. Then again, rising competition from the oil and gas industry for skilled workers will further deplete the supply of available labor and therefore, one of the key impediments to future growth in construction activity will be a lack of ready, willing, and able craftsmen to fill the jobs. (Anticipated growth in labor demand is addressed further under “Construction Labor Market Analyzer®” in discussions on labor and craft outlook.)

Unemployment & Labor Force

With declining construction activity and jobs comes higher unemployment. The rate of unemployment in the construction sector skyrocketed during the downturn, jumping from just 7.4% in 2007 to an annual peak of 20.6% in 2010, far greater than the nation’s overall peak unemployment rate of 9.6% (Chart 8). During this time, total construction

employment (i.e., residential and nonresidential construction combined) fell by nearly 2.6 million, while unemployment simultaneously rose by more than one million. The discrepancy between the two numbers suggests that the construction labor force, which includes both employed and unemployed workers, also plummeted. In fact, between 2007 and 2010, the total construction labor force declined by approximately 1.5 million workers, who presumably left the industry to retire or to search for more stable careers in other fields.

Unfortunately, the industry failed to invest in viable programs aimed at recruitment, training, and retention during the downturn and when hiring resumed in 2011 and the unemployment rate eased, many workers did not return and the construction labor force (residential and nonresidential combined) continued to dwindle, falling from 10.3 million in 2007 to just 8.2 million by 2012.

More recently in March 2013, the construction unemployment rate measured 14.7%. While this rate was down relative to March 2012, when it averaged 17.2%, the labor force’s descent carried on. Specifically, just 8.1 million workers were reported in March 2013, which was off by 165,000 workers relative to March 2012 and down by 340,000 workers compared to March 2011.

It is important to note that unemployment and labor force statistics reflect both residential and nonresidential workers. Historically, about 60% of total construction employment has been represented by the nonresidential sector (including heavy and civil), while 40% has been residential. As such, it can be inferred that the nonresidential labor force currently stands at 4.5 to 5.0 million, down from a pre-recession peak of about six million. (As contractors more actively participate in the CLMA®, a better understanding of the nonresidential labor force and the supply of workers will develop.)

Despite the still high (but falling) rate of available construction labor, many of the most skilled workers have abandoned the industry and there is growing concern that with the shortages contractors are

Table 7Oil & Gas Pipeline Construction Employment: U.S.(in thousands)

!"## !"#! $%&'()*+,-.-/&0-1+2),+') !!!"#$$$$$$$$$$$ !%&"'$$$$$$$$$$$ !("&)345&,-6)&78-.-$+7+, *+,"*$$$$$$$$$$$ *&-"&$$$$$$$$$$$ ("!)345&,-94':)0+;)'5+&,< +.#!&"&$$$$$$$$ +.#'!"*$$$$$$$$ %"!)

!"#$%&'()*!*(+&,-$./&0.("1(2-3"$4(50%6#7&8(9"0:$&8(;#<67<0=>(9"0:$&8(!,&%<-6.?(@$-7&>(-07(A&-B?(C(D<B<6

Source: U.S. Department of Labor, Bureau of Labor Stascs

Chart 8Unemployment Rate: U.S.

0.0%

25.0%

20.0%

15.0%

10.0%

5.0%

2007 2008 2009 2010 2011 2012 March‘13

Overall Construc�on

7.4%

4.6%

10.6%

5.8%

13.9%

8.1%

14.7%

7.6%

16.4%

8.9%

19.0%

9.3%

20.6%

9.6%

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already facing, coupled with the demands of the oil and gas industry, there will be an insufficient supply of skilled labor to staff the growing volume of future construction projects. Given the decline in the nonresidential labor force, future growth in the construction marketplace (driven, in part by oil and gas development, as well as a resurgence in manufacturing as the industry responds to higher gas prices and rising labor costs overseas) will be restrained. Unless the construction sector reacts aggressively, a deficit of as many as two million or more workers may emerge by 2017 (as was concluded in the Mid-Year 2012 20/20 Foresight Report). And simply replacing retiring workers with inexperienced recruits will not be sufficient. Instead, a concerted effort to attract, train, and retain skilled workers must be undertaken.

Challenging Demographics

As previously discussed, the contemporary construction workforce is impacted by a set of contradictory forces that simultaneously result in skills shortages and labor surpluses. On the one hand is the impact of the Great Recession, which was ultimately associated with a 1.5 million decline in the construction labor force and produced high rates of industry unemployment. But at the same time, construction firms have been under enormous pressure to cut costs. This has of course been partially accomplished through layoffs and permanent downsizings, but also through more rapid adoption of new, often labor saving technologies. Prior to the recession, construction firms faced a wave of work. Lengthy backlog was commonplace as were respectable margins. This period allowed even less tightly managed and less technology savvy businesses to thrive, at least to an extent.

The Great Recession brought that industry dynamic to an end. Firm failure has been elevated and only the most competitive firms have managed to sustain something akin to traditional levels of profitability in a historic buyers’ market. Large contractors, which are likely to enjoy stronger banking and insurance relationships and greater capacity to purchase and integrate new technologies, have secured a disproportionate share of new work during the aftermath of the Great Recession. See for instance Associated Builders and Contractors’ Construction Backlog Indicator (CBI) for evidence (Chart 9). The CBI is measured in months and reflects the amount of commercial and industrial construction work under contract, but not yet completed. It is, therefore, a natural leading economic indicator. Overall backlog nationwide stood at 7.9 months during the first quarter of 2013, up from 7.4 months in Q1 2012. Firms with more than $100 million in annual revenue reported their lengthiest backlog ever as a group, with the average firm reporting backlog of 11.2 months.

But the new technology, whether in the form of BIM, green materials, digitization, pre-fabrication, modularization, mobile computing, collaborative contracting or LEAN project delivery, requires the workforce to adapt to new construction service delivery processes. As a result, the nation’s construction industry has forcefully demonstrated that it is possible to have excess labor on the one hand and skills shortages on the other.

And there are geographic considerations as well. While large construction projects have emerged in some regions (particularly in areas with thriving energy sectors and expanding financial services industries), construction activity continues to languish elsewhere. For instance, Northeastern states posted a significant increase in construction backlog at the start of this year, rising from 6.9 months in Q1 2012 to 8.9 months in Q1 2013. In contrast, the nation’s Middle States, including Illinois and Wisconsin, continued to see their construction backlogs fall.

Aside from job losses attributable to the Great Recession, technological transformations, and geographic imbalances, there is the ever-present impact of demographics and retirement. Industry retirees frequently take with them cutting-edge knowledge of construction processes learned through a series of diverse experiences that refine critical thinking and analytical skills. These experienced workers often represent the lead craft workers, trouble-spotters, and troubleshooters, providing explicit or implicit quality control during a project. This often informal influence may be lost through retirement. This in turn triggers even greater reliance on technology among firms.

Given this dynamic, it is not surprising that the aging construction workforce represents one of the most worrisome issues facing enterprise leadership. Recent surveys conducted by the Construction Financial Management Association indicate that skills shortages have emerged as the leading threat to construction industry prosperity, recently surpassing demand for services. According to a recent report by FMI, “while the recession and

Source: ©Associated Builders and Contractors, Construc�on Backlog Indicator

Chart 9Constuction Backlog Indicator

9876

6.56.0 5.9 5.8 6.1

7.2 7.0 7.1 7.38.1 8.1 7.8

7.47.7 8.0 8.0 7.9

45

23

01

Q1

2009

Q2

2009

Q3

2009

Q4

2009

Q1

2010

Q2

2010

Q3

2010

Q4

2010

Q1

2011

Q2

2011

Q3

2011

Q4

2011

Q1

2012

Q2

2012

Q3

2012

Q4

2012

Q1

2013

13



high construction unemployment have temporarily obfuscated the issue, the underlying statistics and demographics make for a grim, or at least challenging, proposition for industry players going forward.”

The rapid aging of the construction labor force can be viewed through the lens of changing industry dynamics over the past decade. According to the Bureau of Labor Statistic’s Current Population Survey, in 2011, 24.6% of construction workers were between the ages of 45 and 54, compared to 20.5% in 2000. Another 14% were between the ages of 55-64 compared to just 8.5% in 2011. In 2000, the median age for a construction worker was 38.7 years. Today, that figure has increased to 41.6 years.

This is not merely a reflection of the passage of time. Data also reflect a lack of construction workforce entry among younger Americans. In 2000, 3.5% of construction workers were between the ages of 16 and 19. By 2011, this figure had plummeted to just 1.4%, a strong indication that relatively small numbers of Americans are jumping into the industry upon high school graduation.

The young seem to have become disinterested in an industry that facially appears low-tech, is associated with highly visible low-wage workers (the highest wage workers, including those involved in design and engineering, are more likely to work indoors), has been associated with massive job declines, and is not closely associated with higher educational attainment. While these largely represent issues of perception, it is clear from the demographic data that people are making career choices based upon those views of U.S. construction. Apparently, the growing disinterest in construction among younger workers has been in force for quite some time. In 2000, 10.4% of the industry workforce was between the ages of 20 and 24. By 2011, this proportion had declined to 7.2%. Age statistics for the U.S. construction industry are summarized in Table 8.

Not only have industry efforts to appeal to the young been insufficient to date, other sources of information available to the young reinforce damaging stereotypes. As an example, a recent report by CareerCast ranked construction as being among the worst occupational categories (171st out of 200 classifications) in America, behind jobs such as cashier and bank teller.

Tellingly, a 2009 survey by RIDGID reveals that only 6% of high school students hope to pursue a future in the skilled construction trades. Among the 94% seeking careers in other disciplines, primary factors included a lack of knowledge regarding the industry and a negative perception of quality of life and work associated with skilled trades.

Educational policy has also played a role in dissuading pursuit of construction-related vocations among the young. In a crusade to assure that every American high school graduate has mastered a basic level of knowledge, standardized tests have emerged as a leading educational tool. Educators and schools are graded in terms of student progress on these tests, typically focused on reading and math. While it is perfectly sensible to emphasize mastery of these basic forms of knowledge, one of the unintended consequences of such efforts is to deemphasize other forms of learning, including the experiential learning so critical to creating interest in construction and other goods-producing industries.

Not coincidentally, there has been associated decline in vocational or career and technical educational offerings in many communities as a result of intense focus on standardized test preparation and college preparatory focus. According to the Department of Education’s Office of Vocational and Adult Education, nationwide enrollment in vocational/CTE courses at the secondary level (high school) has declined by 100,887 students or 1.3% since the 2007-2008 school year, even as more Americans are desperate to acquire employment-relevant skill sets.

Elevated levels of retirement loom. By 2011, approximately 41% of current workers were over the age of 45 while nearly 17% were 55 or older. The implication is that one-sixth of the workforce will leave the industry over the next decade. Chart 10 depicts the marked shift in industry demographics. Unlike industries such as social media, technology, education, and healthcare, construction is simply not managing to attract enough younger workers to maintain demographic balance.

Table 8Age Distribution Of Employed Construction Workers2000 & 2011 (Annual Average)

!""" !"##!"#$%&'()'$*+'"%+,- (../..0 (../..0()1(2 3/4.0 (/5.06.165 (./5.0 7/6.064135 64/6.0 64/..034155 62/2.0 65/2.054145 6./4.0 65/).0441)5 8/4.0 (3/7.0)4'9,$-:'$*+'"%+,- (/2.0 3/(.0

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Natural Gas & Trends in Shale Development

As frequently noted, economic activity related to the nation’s energy sector has been robust, with double-digit growth reported in recent years. Furthermore, spending and hiring associated with oil and gas development have surged, with the industry driving the creation of nearly 150,000 jobs in 2011. Still, the sector can be volatile, as availability of resources, demand for oil and gas relative to alternative sources, and wide variations in pricing can easily affect the rate of expansion.

Among the most noteworthy of energy developments have been those related to natural gas, and more specifically, to shale gas production.

According to the U.S. Energy Information Administration (EIA), shale gas production grew at an average rate of 17% per year between 2000 and 2006, which began with the development of the Barnett Shale in Texas. And with its success, along with new technologies and the high price of natural gas, the industry quickly honed in on other shale plays within the U.S., such as the Fayetteville Shale in Arkansas, the Utica Shale in Ohio (still in the early stages of development), and the Marcellus Shale, which extends across large portions of Pennsylvania, New York, and West Virginia and stretches into Ohio, Maryland, and Virginia. The heightened demand fueled further shale gas production, resulting in an accelerated average annual growth rate of 48% between 2006 and 2010.

Chart 10Age Distribution of the Construction Labor Pool2000 v. 2011

16-19 20-24 25-34 35-44 45-54 55-64 65 years and older

16-19 20-24 25-34 35-44 45-54 55-64 65 years and older

2000 2011

Source: Infogr.am, Sage Policy Group

Shale Gas Activity Throughout the United States

Source: AGC

15



The new technologies that allowed for more shale development include horizontal drilling and hydraulic fracturing. Also known as “fracking,” hydraulic fracturing involves the use of pressurized fluid, comprised mostly of water and sand, to create fractures in underground shale formations and ultimately, to stimulate the upward flow of natural gas. Shale reservoirs typically lie at least one mile below the earth’s surface and the time to develop a single well, which requires site prep, drilling, and other activities, averages three to five months. (Thousands of wells are typically needed to extract gas in a single shale play.) During this time, ancillary development, such as construction of roads, lodging, and housing, also occurs. And once developed, shale gas production of a well can extend for 20 to 40 years.

Hydraulic fracturing, coupled with the nation’s desire for energy independence, has created a booming gas industry. That said, with the most recent economic downturn in 2008 and 2009, natural gas prices fell and still, they remain below their pre-recession peak. But with the rising price of crude oil and the growing disparity between it and the price of natural gas, demand for natural gas has continued to increase. And as most “dry plays” have higher breakeven points and are not economically feasible at current gas prices, the result has been a shift toward drilling in shale formations with high concentrations of liquids.

Looking ahead, further increases in shale development are anticipated. However, some volatility will be inevitable, as the gas industry remains vulnerable to a handful of risk factors. One, as previously noted, is the pricing of natural gas, such that when prices fall, many plays become economically infeasible. Furthermore, as highlighted by ScottMadden in the Winter 2012-2013 Energy Industry Update, water consumption is an issue in states such as Texas, where usage rates in drought-prone areas are elevated. (Per ScottMadden, average freshwater use per shale well in Texas’ Barnett Shale is 250,000 gallons for drilling and another 4.6 million gallons for hydraulic fracturing.) ScottMadden further mentioned that stricter regulations and local opposition may impact future development. For instance, federal limitations include the Environmental Protection Agency’s “green completion” regulation, which will require well operators to use “reduced emissions” or “green well completion” equipment to control the air pollution that accompanies flowback from hydraulic fracturing. Due to take effect in 2015, green completions are already in use on many wells. Other concerns, such as those related to the contamination of drinking water and the disposal of hydraulic fracturing wastewater, have resulted in restrictions in some states and municipalities.

On the other hand, in the January 2012 article, “And the Winner is...Natural Gas,” Economist Anirban Basu reported that there are fewer harmful environmental side effects associated with natural gas and hydraulic fracturing than with other energy resources, such as coal. Therefore, while risk factors may result in rising development and production costs, the overall outlook for shale gas development is quite promising. Nothing more than a slowdown to an already booming sector should be expected at this time.

The economic impact and job creation associated with shale gas development is significant. For instance, in a study released in 2011 regarding the Marcellus Shale’s impact on Pennsylvania’s economy, The Pennsylvania State University found that statewide development related to the Marcellus Shale, which is among the largest shale formations in the U.S., created $11.2 billion in value during 2010. Furthermore, it contributed $1.1 billion in annual state and local taxes, supported nearly 140,000 Pennsylvania jobs (including the creation of 24,000 construction jobs), and generated nearly $3 billion in construction activity. With shale gas development occurring throughout the U.S., the industry’s overall impact on the nation’s economic growth has been and will continue to be considerable.

With shale development, the construction industry has been one of the natural gas industry’s greatest beneficiaries. According to its recently released article, “Program Puts the Spotlight on Workforce Development,” Chesapeake Energy, which is actively engaged in the development of many shale plays throughout the U.S., noted that upwards of 400 workers in about 150 occupations are required to drill a single well. (Again, thousands of wells are typically needed to develop each shale play.) And to access the wells, which are often in remote locations with low population densities, roads must be constructed and maintained, while to accommodate the influx of energy company employees, construction workers, land surveyors, attorneys, title agents, etc., lodging and housing must also be erected. Additional construction opportunities resulting from shale development include the building of pipelines, rail, wastewater facilities, export terminals, and industrial structures, such as chemical plants. In regard to the latter, Bloomberg reporters Bradley Olson, Edward Klump, and Jack Kaskey recently wrote in their article, “Dearth of Skilled Workers Imperils $100 Billion Projects,” that $100 billion in petrochemical projects are currently planned, as chemical companies rush to take advantage of the low price of natural gas.

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Impact of Gas Trends on Labor Demand

Growth in oil and gas shale drilling has resulted in numerous opportunities for new construction, which did not exist in many areas until recently. Yet, while the continued development of shale gas plays has been a boon to the nation’s construction sector, rising demand for construction goes hand in hand with rising demand for construction labor and today, traditional construction sectors must compete with the oil and gas industry for labor more than ever before. A near endless supply of workers is needed not only for well sites and supportive infrastructure, but also for new structures used to process gas into usable products. And while the operation of oil and gas facilities requires a number of skilled craftsmen, the construction and operation of each planned chemical plant similarly demands thousands of tradesmen with the same set of skills. It is fully expected that many skilled workers will pursue these seemingly more stable positions in lieu of jobs in the more traditional construction sector, which in turn will further diminish the supply of construction labor and result in more costly project delivery.

Already, contractors are faced with issues related to staffing and while some may be forced to turn projects down due to a lack of available labor, others may choose to pay workers more as they compete for labor. Owners, which are ultimately responsible for the costs of these projects, are especially concerned, as an inadequate supply of workers typically correlates with higher costs, a rise in safety incidents, more rework, missed deadlines, unexpected overruns, and diminished productivity. These concerns are valid and during previous expansionary years (i.e., in the period leading up to the most recent recession), 54% of Construction Users Roundtable® owner members reported shortage-induced labor cost escalation of as much as 15% to 20%, with nearly 100% reporting labor cost increases of at least 5%.

Experienced professionals and skilled craftsmen are in great demand by gas companies, including engineers, surveyors, construction managers, and other trades involved in the design and construction of pipelines, distribution infrastructure, and related facilities. And gas companies are ready, willing, and able to pay for them, which has resulted in a surge in average salaries. For instance, Mssrs. Olson, Klump, and Kaskey wrote in their article that “wages in energy and mining have grown at nine times the rate of all industries since 2008” and that earnings of engineers have undergone “a 20% to 50% jump since 2009.”

To address the lack of available labor, a number of companies, states, schools, colleges, and universities have been partnering to create training

programs for skilled laborers and supervisors. For instance, Pennsylvania College of Technology and Penn State Extension have collaborated to create the Shale Training & Education Center (ShaleTEC), which focuses on workforce development related to the oil and gas industry. Through ShaleTEC, classes and training programs are offered at Penn College and Penn State campuses throughout Pennsylvania. And separately, Pennsylvania College of Technology has partnered with Westmoreland Community College (Pennsylvania), West Virginia Community College, Eastern Gateway Community College (Ohio), and Broome Community College (New York) to form Marcellus ShaleNET. Funded by a $4.9 million federal grant, ShaleNET brings together Workforce Investment Boards, training providers, and industry employers to facilitate recruitment, training, and placement for key occupations associated with shale development. Additional training programs have been created with similar goals of preparing graduating high school and college students for work in the gas industry. Yet still, with industry demands rising for many skilled tradesmen, as well as professionals, the current supply of workers is a widespread concern among owners and contractors throughout the U.S. and particularly in areas with active shale plays. As construction volume is expected to expand in the years ahead, this concern is a valid one and should be immediately addressed.

The Atlantic Mid-West United States

The Mid-Atlantic and Mid-West regions of the nation have not in recent decades been closely associated with energy production. Rather, these regions have been associated with large American cities specializing in finance, government, medical research, distribution, and leisure. These cities include Chicago, Philadelphia, Washington, D.C., and Baltimore. However, if one goes further back into history, these regions were at the vanguard of energy output in America. On August 28, 1859, in Titusville, Pennsylvania, Colonel Edwin Drake drilled the first successful oil well designed for the sole purpose of finding oil. This unleashed an international search for petroleum, which has utterly transformed the way we have lived ever since. In recent decades, however, energy production has been more firmly associated with states like Alaska, North Dakota, Texas, Louisiana, Oklahoma, and other areas beyond the reach of the Mid-Atlantic or Mid-West.

The lack of identification between energy production and these regions is changing. Thanks in large measure to emerging shale technologies and the presence of the Utica and Marcellus shale formations, there has been renewed interest in the region from an energy production perspective.

17



Already, Pennsylvania and West Virginia have emerged at the vanguard of natural gas production nationally. Other states, including Ohio, are poised to follow. Although oil and gas development in this area is and will be concentrated in a handful of states, others serve as key contributors to supplier networks and trade flows related to the industry. As such, the “Atlantic Mid-West” deserves some special attention and a review of a few of its key macroeconomic trends can be insightful.

As noted earlier, the nation’s gross domestic product, a gauge of economic health, fell in both 2008 and 2009. During these years, the U.S. entered into a recessionary period and the Atlantic Mid-West followed suit. Specifically, in the nine-state region defined here to include Illinois, Indiana, Maryland, Michigan, New York, Ohio, Pennsylvania, West Virginia, and Wisconsin, economic activity declined by 1.9% in 2008 and by 3.5% in 2009, which were steeper than the drops in national GDP during these years. Thanks in part to a jump in industrial production, regional output rose by 3.3% in 2010. Continuing with nationwide trends, however, it slowed in 2011. Yet when national GDP increased in 2012, regional GDP leveled out and posted a below average growth rate of 1.9% (Table 9).

The steeper-than-average decline in regional GDP during 2008 and 2009 can be largely attributed to the downturn in manufacturing (and especially in the production of automobiles). More recently, driven by rising consumer confidence and an improving housing sector, consumer spending has rebounded, which has brought about a resurgence of automobile sales. Business investment has expanded too and there has been renewed growth in durable goods.

The Atlantic Mid-West’s recession was deep and its initial resurgence was strong, yet short-lived. However, the severity of the downturn and intensity of the recovery were not uniformly observed among the region’s nine states. In 2009, for example, when regional GDP dropped by 3.5%, the declines in some states were far greater. For instance, in Michigan, Indiana, and Ohio, which are heavily weighted in manufacturing, economic activity declined by 9.1%, 6.0%, and 5.7% respectively. In stark contrast, West Virginia’s economy expanded by 0.6% during that year and Maryland’s economy contracted by just 1.1%. And in 2010, as their economies recovered, Indiana and Michigan posted above average

increases in GDP of 6.4% and 4.9%, respectively. (Ohio, however, continued to post below average economic performance.) Elsewhere, at 4.0%, New York also encountered strong growth in 2010, but its expansion eased by 2011 and 2012, with annual increases in GDP of just 1.2% and 1.3%, respectively, in those years.

By 2012, Indiana and West Virginia led the way in economic growth with annual GDP gains of 3.3% in each state. (Yet still, West Virginia’s overall contribution was minimal and its economy continues to be among the least diverse.) Elsewhere, Maryland (2.4%), Michigan (2.2%), and Ohio (2.2%) posted above average growth for the region in 2012; however, it should be noted that Michigan’s economy remains fragile. Most other Atlantic Mid-West states followed regional trends and their growth rates ranged from 1.5% to 1.9% for the year. In the years ahead, expect oil and gas development to drive much of the economic growth in states such as Pennsylvania and Ohio.

As for the impact of GDP changes on the region’s job market, the Atlantic Mid-West mirrored national trends in 2008, 2009, and 2010, when construction employment declined in each of the three years. And when construction employment growth in the U.S. resumed in 2011, the Atlantic Mid-West followed suit. However, in 2012, when construction job growth accelerated nationally, it eased in the nine-state region, slowing to just 0.9% for the year (consistent with the region’s below average growth in GDP). More recently, while construction employment growth in the U.S. continued to trend upward at the start of 2013, it fell on a year-over-year basis in the Atlantic Mid-West, relative to 2012’s first quarter. (See Charts 11 and 12.)

Table 9Percent Change in Atlantic Mid-West Real GDP from Preceding Period


0 250

2,000 1,750 1,500 1,250 1,000

750 500

(in th

ousa

nds)

Chart 11Total Construction Employment: Atlantic Mid-West

2007 2008 2009 2010 2011 2012 1st Qtr‘13

1,78

3

1,71

9

1,48

6

1,39

9

1,41

9

1,43

1

1,28

6

2007 2008 2009 2010 2011 2012GDP 1.1 -‐1.9 -‐3.5 3.3 1.9 1.9Source: U.S. Department of Commerce

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While growth in construction jobs eased in the Atlantic Mid-West during 2012, much of the slowdown was driven by a sharp decline in Illinois, where construction employment contracted by 4.0%. In contrast, it surged in West Virginia and Indiana, which posted annual increases of 7.9% and 3.5%, respectively. The region’s other six states posted more moderate, yet positive gains in 2012. However, by this year, nearly all states within the Atlantic Mid-West encountered a loss in construction jobs during the first quarter, relative to the start of 2012. The exceptions were Pennsylvania, where there was a negligible 0.1% year-over-year rise, New York, where construction jobs inched upward by 0.8%, and Maryland, where the industry expanded with an above average 4.0% jump in construction employment (relative to the start of 2012).

In total, 1.3 million construction workers were employed in the Atlantic Mid-West during the first quarter of this year. Assuming a 60/40 split between nonresidential and residential employment, it is estimated that more than 750,000 workers were employed in the region’s nonresidential construction trades, which compares to a pre-recession estimate of almost one million nonresidential workers employed in the Atlantic Mid-West during 2007. With many of the 200,000 nonresidential workers that lost their jobs settling for retirement or positions in other industries, there is growing concern that the diminished labor force will be unable to support ongoing and planned projects. And with the rapid growth of the oil and gas sector, the situation becomes even more alarming as new developments in this area require construction labor to build the needed wells, infrastructure, factories, etc.

Looking ahead, Illinois, New York, and Ohio will likely be leaders in future construction job growth, provided the supply of available workers in these states will be sufficient to accommodate the demand. During the next five years, the three states are forecasted not only to have high volumes

of nonresidential construction activity in their pipelines (according to the Construction Labor Market Analyzer®), but also to have significant demand for labor, particularly as it relates to the current supply of employed workers. (See further discussions under “Construction Labor Market Analyzer®,” as well as Appendix E.) As such, their employment demands will be among the greatest in the Atlantic Mid-West region and potential labor shortages should be considered. Trailing closely behind, Pennsylvania will experience a similar need for skilled labor in the years ahead, which may prove problematic given the strength of the oil and gas industry in that state.

There are a variety of reasons driving future systemic skills shortages in key construction trades, including the revealed tastes and preferences of young people, technological shifts, and elevated rates of retirement. For many of the states in the Mid-Atlantic and Mid-West, the situation would be arguably even more problematic if a robust construction recovery were to transpire. After all, not only are many veteran workers leaving the industry, but also many younger workers have been abandoning these states altogether.

Between Census 2000 and Census 2010, the nation’s population increased 9.7% and by 2010, it was approaching 309 million. Yet, while the nation was busily adding 27.3 million people over the course of a decade and expanding population by nearly a tenth, Michigan actually lost nearly 1% of its population, Ohio expanded 1.6%, New York grew just 2.1%, West Virginia by 2.5%, Illinois by only 3.3%, and Pennsylvania by 3.4%. Even states that led the region failed to expand population as rapidly as did the nation (Indiana 6.6%; Maryland 9.0%).

The implication of these demographics is that these states tend to be home to older, less mobile populations. To the extent that there is a boom in energy production, the likelihood that enough trainable workers will be readily available is unlikely, particularly when one considers the fact that while many members of these states’ respective workforces live in metropolitan areas, much of the exploration and development of natural gas would be in more rural areas.

Construction Labor Market Analyzer®

As noted throughout this report, the U.S. economy is steadily expanding. While some near-term deceleration is anticipated, evidence suggests that further expansion should be expected for most sectors in the coming years. And already, the recovering economy and pent-up demand


Chart 12YOY Change in Total Construction Employment:Atlantic Mid-West

0

50,000

-50,000

-100,000

-150,000

-200,000

-250,000

0.0%

5.0%

-5.0%

-10.0%

-15.0%

-20.0%

2008 2009 2010 2011 2012 1st Qtr‘13

-3.6%-64,400

-13.5%-232,800

-5.9%

-87,100

1.4%

19,600

0.9%

12,200

-1.4%

18,033

19



have allowed for resumed growth of the nation’s construction sector. However, with the industry’s weakened labor force, many contractors are beginning to warn of staff shortages. With more development ahead, there is grave concern that the supply of labor will fall considerably short of demand— potentially by as much as 2 million or more workers by 2017.

The Construction Labor Market Analyzer® (CLMA®) is a revolutionary tool available to assist owners, contractors, unions, and others in mitigating the risks associated with labor constraints, as well as contingencies and costs that may arise during the various phases of project development. More specifically, the CLMA®, an award-winning, state-of-the-art analytics tool and project database, allows users to not only estimate labor requirements for specific crafts, but to also identify and avoid potential shortages, thereby reducing labor costs, improving productivity, and lessening risk. The CLMA® has become essential to owners, planners, contractors, and managers throughout the U.S. as they work toward completing projects on time and within budget. And as the economic expansion carries on and the demand for construction intensifies, the CLMA®’s importance and value will continue to grow rapidly.

Construction Volume

The CLMA®’s database of nonresidential construction projects is considerable and growing, accounting for nearly 60% of the U.S. Department of Commerce’s overall estimate in 2012. And looking ahead, the CLMA®’s project pipeline reflects $2.3 trillion in planned nonresidential construction activity through 2017 (averaging $452 billion per year), with more than $500 billion to be concentrated in the Atlantic Mid-West (Chart 13). Of this, planned industrial projects currently make up about one-fourth of the CLMA®’s national estimate, while they account for just 10% of the anticipated volume in the Atlantic Mid-West. (The Atlantic Mid-West is a nine-state region, comprised of Illinois, Indiana, Maryland, Michigan, New York, Ohio, Pennsylvania, West Virginia, and Wisconsin.)

Within the Atlantic Mid-West, the anticipated $500 billion in total nonresidential construction activity is not evenly distributed among the nine states. During the five-year period, New York is expected to lead the way with more than $150 billion in planned industrial and non-industrial activity, followed by Illinois with $83 billion and Ohio and Pennsylvania with upwards of $60 billion each (Chart 14).

These CLMA® total construction estimates differ markedly from historic patterns. For instance, in 2007, the last year before the downturn, Illinois represented nearly 40% of private nonresidential construction put-in-place. During the most recent year for which these data are available, Illinois represented nearly 37% of regional private nonresidential construction put-in-place despite a disastrous downturn in activity. Yet, the estimates in Chart 14 are consistent with an Illinois share of just 16%, driven in large measure by the massive gain in regional market share indicated for New York state.

In 2007, New York state’s share of regional private construction investment stood at 14%. By 2011 it had risen to 21%. According to the CLMA® estimates, New York’s share will rise to 30.4% during the 2013-2017 period. Other states indicated as producing expanding regional share during the forecast horizon include Maryland, Michigan, Ohio, Pennsylvania, and West Virginia. These are, therefore, among the most likely states to experience skills shortages since their historic construction workforces will not be sufficient to deal with the expansion to come.

Taking a closer look at annual volumes, industrial spending at the national level appears to peak next year (based on projects logged in the CLMA® as of March 2013), while non-industrial spending will steadily accelerate throughout the five-year period. The data indicate that this perceived trend will not be unique to the U.S., but will also apply to the Atlantic Mid-West. (See Charts 15 and 16.)

Source: CLMA®

0

2,500,000

2,000,000

1,500,000

1,000,000

500,000 542,393

52,165

1,716,086

2,258,479

466,330 518,495

(in m

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Chart 13CLMA® Construction Put in Place 2013-2017

Industrial

United States Atlantic Mid-West

Non-Industrial Total All Projects

Source: CLMA®

0

180,000 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000

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Chart 14CLMA® Total Construction Put in Place 2013-2017:Atlantic Mid-West

IL IN MD MI NY OH PA WV WI

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It should be noted that while the CLMA®’s inventory of industrial project data is robust in the short-term, its database of future projects requires further development. As steady growth in the industrial marketplace (and in projects related to oil and gas in particular) continues, the number of owners contributing project data to the CLMA® will rise accordingly. As it does, industrial volumes, as reported by the CLMA®, will follow suit.

Indeed, there are many reasons to believe that America is on the verge of an industrial building boom. A weak U.S. dollar combined with ever more efficient U.S. corporations, capital intensive production techniques, and incredibly affordable natural gas have reduced the output cost gap between America and much of the balance of the world. The result has been a flurry of re-shoring episodes from Ohio to Texas and California to North Carolina. The list of companies bringing industrial work back to America is lengthy, and includes Caterpillar, NCR, and Whirlpool to name but a few.

It is true, however, that the most recent data signal near-term industrial weakness. According to the Chicago Federal Reserve Bank, Mid-West manufacturing output declined in April 2013, including auto production (-0.9%), steel (-0.9%), and machinery (-0.3%). Given a still struggling global economy and domestic economy still expanding at an approximately 2% rate, it is not altogether surprising that growth in industrial activities remains sporadic. But evidence of these near-term headwinds does not change longer-term

considerations that work in America’s favor along the dimension of industrial production and related construction activities.

In a recent release, the Manufacturers Alliance for Productivity and Innovation (MAPI) forecasted that inflation-adjusted industrial construction will expand by 6% in 2013 and 9% in 2014. Recently, the most rapid expansion has been in chemicals, nonmetallic minerals, and in rubber and plastics. For whatever reason, lingering uncertainty regarding America’s industrial production potential continues, perhaps explaining a relatively mediocre 3% increase in construction of new manufacturing plants during a recent three-month period.

In the final analysis, any survey that is conducted benefits from widespread participation and the CLMA® database is no different. The good news is that CLMA® participation is already elevated and increasing with each passing month. Furthermore, projects within the CLMA® database trend toward a greater likelihood of commencement and completion. Indeed, CLMA® total nonresidential construction estimates are in line with other surveys and analyses, which indicate meaningful expansion in skills/labor demand in future years. For instance, earlier this year at Wells Fargo, the Equipment Finance Division’s Optimism Quotient posted its third highest national optimism reading in 13 years, suggesting that construction executives anticipate nonresidential construction conditions to improve this year and beyond. The Quotient is actually higher for distributors than for contractors (121 vs. 97), a reflection of the expectation that the expansion in equipment purchases will be particularly rapid as contractors wrestle with an equipment replacement cycle. While these Wells Fargo data are broadly consistent with CLMA® estimates in terms of signaling market trends, the drop off after 2014 in CLMA® industrial estimates may be the result of lingering uncertainty regarding projects in the pipeline. As additional data are collected, in future surveys, it is quite possible that the estimates of construction activity anticipated after 2014 will rise above the current estimate. In other words, industrial activity beyond 2014 may be somewhat understated; however, that will change as more owners put their projects into the CLMA® and the database grows.

There are a variety of sources consistent with the notion that additional survey responses will result in an increase in projected activity. This is true for both the nation and the Atlantic Mid-West region. According to Reed Construction data, states with the highest volume of project activity as of June 2013 in the study area are New York, Indiana, and Pennsylvania. Again, CLMA® estimates are broadly consistent with these data, but the outlook for Indiana may be somewhat understated. In

Source: CLMA®

0

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Chart 16CLMA® Construction Put in Place 2011-2017: Atlantic Mid-West

2011 2012 2013 2014 2015 2016 2017


Source: CLMA®

0

450,000 400,000 350,000 300,000 250,000 200,000 150,000 100,000 50,000 41

,578 13

4,74

7

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5726

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978

108,

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299,

425

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187

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335,

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382,

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109,

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72,0

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414,

907

(in m

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Chart 15CLMA® Construction Put in Place 2011-2017: U.S.

2011 2012 2013 2014 2015 2016 2017


21



many ways, the Indiana market is unremarkable. According to 2010 census statistics, the state is in the middle range of population and income among Mid-West states. But the state is home to both the largest and third largest planned construction projects in the Mid-West. Its Ohio River Bridges Project-East End Crossing is estimated to cost $763 million dollars and will be under construction between 2012 and 2016. In addition, the Interstate 69 extension is estimated to cost $403 million and will run from 2012 through 2014. There are other regional projects of note that may not be fully reflected in CLMA® estimates, including expected energy projects in Wisconsin and Michigan.

Annualized nonresidential construction spending has been running between $550 billion and $600 billion for much of 2013. Yet, industrial projects have not been the sole source of activity. Indeed, a number of the most highly anticipated projects within the study area fall under the non-industrial categories of retail, hotel, casino, and higher education. In fact, information from McGraw-Hill

Construction, Reed Construction, and Mid-West real estate journals indicate that some of these projects have already broken ground, though many have not. As these and other non-industrial projects come to fruition and the CLMA®s database continues to grow, its estimates of activity will rise accordingly.

Labor Demand Outlook

As overall construction volumes accelerate during the years ahead, so too will the demand for construction labor. And with its Project Labor Forecaster®, the CLMA® projects total nonresidential labor requirements in the U.S. to rise from 3.4 million workers during the first quarter of 2013 to a peak of 6.8 million workers by 2017, with a quarterly average of about six million workers during the five-year period (Chart 17). As noted earlier, while most of this demand will be associated with non-industrial projects, industrial demand for labor in the U.S. remains strong (Chart 18) and it is anticipated to intensify further in later years as the CLMA®’s industrial database continues to expand.

Chart 17Labor Demand for Combined Industrial & Non-Industrial Projects (United States vs. Atlantic Mid-West)

Source: CLMA®

2013Q12013Q2

2013Q32013Q4

2014Q12014Q2

2014Q32014Q4

2015Q12015Q2

2015Q32015Q4

2016Q12016Q2

2016Q32016Q4

2017Q12017Q2

2017Q32017Q4

5,000,000

6,000,000

8,000,000

7,000,000

0

3,000,000

4,000,000

1,000,000

2,000,000

All Project Demand (U.S.) All Project Demand (Atlan�c Mid-West)

Chart 18Labor Demand for Industrial Projects (United States vs. Atlantic Mid-West)

Source: CLMA®

2013Q12013Q2

2013Q32013Q4

2014Q12014Q2

2014Q32014Q4

2015Q12015Q2

2015Q32015Q4

2016Q12016Q2

2016Q32016Q4

2017Q12017Q2

2017Q32017Q4

400,000

600,000

500,000

0

300,000

100,000

200,000

Industrial Demand (U.S.) Industrial Demand (Atlan�c Mid-West)

Chart 18Labor Demand for Industrial Projects (United States vs. Atlantic Mid-West)

2013Q12013Q2

2013Q32013Q4

2014Q12014Q2

2014Q32014Q4

2015Q12015Q2

2015Q32015Q4

2016Q12016Q2

2016Q32016Q4

2017Q12017Q2

2017Q32017Q4

400,000

600,000

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0

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100,000

200,000

Industrial Demand (U.S.) Industrial Demand (Atlan�c Mid-West)

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As discussed earlier (see “Unemployment & Labor Force”), the total nonresidential construction labor force currently stands at an approximated 4.5 to 5.0 million workers. With average quarterly demand for six million workers and a peak demand of 6.8 million workers (as projected by the CLMA®), a concern of labor shortages should not be understated. And with the CLMA®’s project database accounting for just 60% of the Department of Commerce’s estimates, it can be assumed that actual demand will likely peak at more than 6.8 million workers, resulting in a potential shortage of two million or more workers in the U.S. Prudent planning and use of the CLMA® will be an essential component of successful project management and execution during the years to come.

Within the Atlantic Mid-West, total nonresidential labor demand (i.e., industrial and non-industrial combined) is expected to jump from 762,000 in 2013 to a peak of more than 1.5 million by 2017, with an average quarterly demand of nearly 1.4 million. Of this, approximately 40,000 workers will be required, on average, for the Atlantic Mid-West’s planned industrial projects. (See Charts 17 and 18.) Again, as the CLMA®’s industrial database continues to expand, labor demand for industrial projects will rise accordingly.

Among the nine states in the Atlantic Mid-West region, New York will see the greatest demand for labor, with a peak of nearly 300,000 workers needed for all nonresidential projects (i.e., industrial and non-industrial) by 2017. Ohio will follow with an estimated peak of 224,000 workers required toward the end of the five-year period. In contrast, West Virginia will be the smallest driver of labor demand in the nine-state area, with a peak need of 42,000 workers by next year (Appendix E.) However, demand for labor in West Virginia is expected to expand over time in conjunction with the overall growth in activity there and its rising regional market share.

Honing in on the Atlantic Mid-West’s industrial projects, Michigan will be a significant driver of labor demand, with 13,000 workers required for industrial development by 2014 (based on industrial projects logged in the CLMA® as of March 2013). And on Michigan’s heels, Illinois, Ohio, and Pennsylvania will each face peak industrial labor demand of more than 10,000 workers within the next several years. As for the region’s smallest driver of industrial labor demand, Wisconsin’s peak need of fewer than 3,000 workers was to have occurred earlier this year (Appendix F.)

One could reasonably ask whether or not forecasts of construction labor demand in New York are excessive. As of June 13, 2013, Reed Construction Data’s database indicated that in New York there was a total of $123,817,090,743 in commercial construction projects in the pre-bid phase and $2,103,563,231 in the bid phase. Furthermore, the total value of post-bid phase commercial construction projects in New York was $150,666,811,514. As for the value of commercial construction projects in all nine states, Reed Construction Data shows a total of $299,438,086,207 in the pre-bid phase, $5,035,398,543 in the bid phase, and $656,245,571,629 in the post bid phase. These data are consistent with CLMA® estimates of labor demand in New York state vis-à-vis the balance of the study area. This suggests that, indeed, there will be significant demand for nonresidential construction workers, both in industrial and non-industrial categories, going forward.

As discussed above, Mid-West states are among the most likely to experience skills shortages going forward since a slowly expanding construction workforce will be insufficient to handle the volume of projects both in and out of CLMA®’s database. This conclusion is affirmed by a number of other sources. For example, according to Manpower Employment Outlook Survey’s 2013 Quarter 3 results, all four U.S. regions report positive net employment outlooks. In fact, the construction industry, which suffered disproportionately during the downturn and its immediate aftermath, represents the third fastest expanding employment sector In terms of projected employment growth.

Within this dynamic environment is the industrial segment, which stands to outperform the balance of the construction industry from a growth perspective. The U.S. industrial sector absorbed 41 million square feet of warehouse space during the fourth quarter of 2012, eclipsing retail and office absorption more than twofold. This represents the industrial sector’s second highest absorption level on record dating back 20 years.

Potential Labor Shortage: About 2.0 M

Nonresidential Labor Force: 4.5 - 5.0 M

U.S. Peak Labor Demand 2013 - 20176.8 Million or More Skilled Workers

23



Craft Outlook

The CLMA® is unique in that it forecasts labor demand not only by project type, but also by craft. As illustrated earlier, overall labor demand is forecasted to rise with the anticipated expansion in construction activity. And similarly, the need for nearly all key construction trades will escalate accordingly, even though variations in demand can be expected for each.

Table 10 illustrates the anticipated change in craft demand in the U.S. as it relates to the current supply of employed workers. Specifically, it offers a comparison of future peak craft demand, as projected by the CLMA®, to the number of tradesmen employed during 2012, as reported by the U.S. Department of Labor. The contrast is striking and nearly all crafts unique to the construction industry will face significant increases in demand in the years ahead. And given the weakened state of today’s construction labor force and diminished supply of available skilled labor, shortages can be expected to intensify. Unless the construction industry can successfully promote and facilitate new training programs for the young adult population and can attract more experienced workers from other sectors, the availability of construction labor will continue to drop as demand escalates.

In reviewing Table 10, it is important to note that while occupations that are related, but not unique to construction appear to have ample supply; concerns of potential shortages among these trades should not be dismissed. The number of workers employed in “Related Occupations” during 2012 (as reported by the Department of Labor) are spread across multiple industries; however, the projected peak demand figures for these occupations (as reported by the CLMA®) reflect the nonresidential construction sector. As such, even though the numbers of employed linemen, machinists, millwrights, truck drivers, etc. seem sufficient, future demand from other industries, which is not captured here, may result in shortages for some of these “related” trades.

As noted in Table 10, Laborers will see the greatest demand and by 2017, more than 1.6 million will be required in the U.S. And similarly, Laborers will be the leading driver of craft demand in the Atlantic Mid-West. As shown in both Table 11 and Chart 27, a peak of 357,000 Laborers will be needed for planned nonresidential projects in the Atlantic Mid-West by 2017. With only 220,000 Laborers employed in this region during 2012 (see Table 11), significant shortages for this craft are likely to develop in the coming years. And as the CLMA®’s database continues to expand, the demand for Laborers will

escalate further. Consequently, shortages can be expected to intensify during the forecast period for this and other trades.

Similar comparisons for each of the Atlantic Mid-West’s nine states can be found in Appendix G. In reviewing Appendix G, note that in contrast to the current regional forecast, Illinois, Maryland, and Michigan may develop shortages of Boilermakers/Boilermaker Welders and Operators of Heavy Cranes, while Pennsylvania and West Virginia may face shortages of the former trade and New York and Wisconsin may face shortages of the latter. Furthermore, Carpenters may be in short supply in Indiana, Michigan, and Ohio, whereas Electricians may be scarce in Wisconsin.

As noted, Tables 10 and 11 provide insight into occupational categories likely to be associated with skills shortfalls during periods of peak demand. In general, one would expect the largest skills shortfalls in those categories of endeavor requiring the most sophistication and experience. This is reflected to a certain extent in CLMA® estimates, but not entirely. For instance, potential nationwide shortages are reported in the Laborer category, but not in certain other categories such as Carpenter (Interior Systems) or Electrician. This seems rather counterintuitive and unlikely. A possibility may be that CLMA® participants are underestimating their future demand for high skills categories – those categories associated with significant human capital. Such underestimation can prove costly since these occupations are also associated with significantly higher hourly compensation than less-skilled positions. There is also a likelihood that due to a recent history of underinvestment in industrial construction in recent years in America, relatively few respondents completely understand the staffing needs associated with industrial projects, particularly large ones. Therefore, the results are subject to change as more project owners begin to participate in the CLMA®.

The U.S. Department of Labor forecasts that national employment in the construction trades will expand 22.5% between 2010 and 2020, from 4.86 million in 2010 to 5.96 million in 2020. The number of Laborers is expected to grow 21.3% over the same time period, from 998.8 thousand to 1.2 million. As for other construction occupations, several have been noted by the Department to grow most rapidly during the ten-year period. These include Craft Helpers, Brickmasons, Blockmasons, Stonemasons, and Tile & Marble Setters at 60.1%. Though, CLMA®’s peak estimates for Craft Helpers and Tile & Marble Setters stand in contrast to national expectations as depicted in Table 10. Estimates of labor supply may become more refined as additional data arise.

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Table 10Comparison of Base Employment to Peak Demand, United States

Sources: U.S. Department of Labor & CLMA®

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It is conceivable that certain supply projections in Table 10 (as determined by the BLS) will prove to be overstated and this will depend upon a variety of factors, including the level of job openings in other industries. However, until the CLMA® supply database has reached critical mass, the BLS data are the most comprehensive and accepted data

available to the industry. To the extent that supply is potentially overstated, it opens up the possibility that estimates of shortfalls will be somewhat understated. In fact, Projections Central projects the supply of Electricians to reach just 200,000 by 2018.

25



As for the Atlantic Mid-West shortage, it is possible that peak demand estimates in Table 11 are overstated for the following crafts given expected long-term economic and industry trends: Ironworkers (+77,000), Laborers (+53,000), and Sheet Metal Workers (+10,000). By contrast, CLMA® may be understating peaks for the following crafts: Carpenters (-200,000) and Electricians (-670,000).

Honing in further on the CLMA®’s estimates of labor demand for selected key trades in the Atlantic-Mid-West, Charts 19 through 33 illustrate craft demand for nonresidential construction projects scheduled

to occur during the next five years. While all key trades will encounter increases ahead, some will see demand peak in the coming months, while others will face peak demand toward the middle or end of the five-year period. As the CLMA® database of owner-contributed project data grows, future construction activity, as projected by the CLMA®, will rise accordingly. And as it does, peak craft labor demand will increase further and will be pushed into later years. Fortunately, the CLMA® online tools will provide the analytics required to identify the need and allow users to respond accordingly.

Table 11Comparison of Base Employment to Peak Demand, Atlantic Mid-West Nine-State Region

Sources: U.S. Department of Labor & CLMA®

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Source: CLMA®

Chart 19BOILERMAKERDemand by Quarter (All Projects): Atlantic Mid-West3,000

2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

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Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 20BOILERMAKER WELDERDemand by Quarter (All Projects): Atlantic Mid-West2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

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2016

Q1

2016

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2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 21CARPENTER (All Unspecified & Scaffold Builder)Demand by Quarter (All Projects): Atlantic Mid-West

160,000140,000120,000100,00080,00060,00040,00020,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

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2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 21CARPENTER (All Unspecified & Scaffold Builder)

y ( j )Demand by Quarter (All Projects): Atlantic Mid-West160,000140,000120,000100,000

80,00060,00040,00020,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

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2015

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2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 22CRAFT HELPER Demand by Quarter (All Projects): Atlantic Mid-West4,5004,0003,5003,0002,5002,0001,5001,000

5000

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

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2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 23ELECTRICIAN Demand by Quarter (All Projects): Atlantic Mid-West

120,000

100,000

80,000

60,000

40,000

20,000

0

2013

Q1

2013

Q2

2013

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2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 24INSULATOR Demand by Quarter (All Projects): Atlantic Mid-West

45,00040,00035,00030,00025,00020,00015,00010,0005,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 25IRONWORKER (Reinforcing) Demand by Quarter (All Projects): Atlantic Mid-West

60,000

50,000

40,000

30,000

20,000

10,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 26IRONWORKER/WELDER (Structural) Demand by Quarter (All Projects): Atlantic Mid-West

60,000

50,000

40,000

30,000

20,000

10,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

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2015

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2016

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2016

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2016

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2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

27



Source: CLMA®

Chart 27LABORER Demand by Quarter (All Projects): Atlantic Mid-West

400,000350,000300,000250,000200,000150,000100,00050,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

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2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 28MILLWRIGHTDemand by Quarter (All Projects): Atlantic Mid-West6,000

5,000

4,000

3,000

2,000

1,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 29OPERATING ENGINEER Demand by Quarter (All Projects): Atlantic Mid-West

180,000160,000140,000120,000100,00080,00060,00040,00020,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 30PAINTERDemand by Quarter (All Projects): Atlantic Mid-West

60,000

50,000

40,000

30,000

20,000

10,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 31PIPEFITTERDemand by Quarter (All Projects): Atlantic Mid-West

60,000

50,000

40,000

30,000

20,000

10,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 32PIPEFITTER/COMBO WELDERDemand by Quarter (All Projects): Atlantic Mid-West3,500

3,000

2,500

2,000

1,500

1,000

500

020

13Q

120

13Q

220

13Q

320

13Q

420

14Q

120

14Q

220

14Q

320

14Q

420

15Q

120

15Q

220

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320

15Q

420

16Q

120

16Q

220

16Q

320

16Q

420

17Q

120

17Q

220

17Q

320

17Q

4

Source: CLMA®

Chart 33SHEET METAL WORKERDemand by Quarter (All Projects): Atlantic Mid-West

60,000

50,000

40,000

30,000

20,000

10,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

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2016

Q1

2016

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2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

While Charts 19 through 33 reflect craft demand for all planned nonresidential projects in the Atlantic Mid-West (as reported by the CLMA®), Charts 34 through 48 isolate craft demand for planned industrial projects. (Again, these charts reflect demand for just a handful of selected key trades.)

As with total nonresidential construction, which reflects both industrial and non-industrial development, future increases in industrial activity will result in rising demand for all key trades within the nine-state area, with some trades facing peak demand before others. However, unique to the

28

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Source: CLMA®

Chart 34BOILERMAKERDemand by Quarter (Industrial Projects): Atlantic Mid-West

3,000

2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 35BOILERMAKER WELDERDemand by Quarter (Industrial Projects): Atlantic Mid-West

2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 36CARPENTER (Scaffold Builder)Demand by Quarter (Industrial Projects): Atlantic Mid-West

4,000

2,0002,5003,0003,500

1,5001,000

5000

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 37CRAFT HELPERDemand by Quarter (Industrial Projects): Atlantic Mid-West

4,500

2,0002,5003,0003,5004,000

1,5001,000

5000

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 38ELECTRICIANDemand by Quarter (Industrial Projects): Atlantic Mid-West

8,000

3,0004,0005,0006,0007,000

2,0001,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 39INSULATORDemand by Quarter (Industrial Projects): Atlantic Mid-West

3,000

2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 40IRONWORKER (Reinforcing)Demand by Quarter (Industrial Projects): Atlantic Mid-West

6,000

5,000

4,000

3,000

2,000

1,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

industrial sector, demand in the Atlantic Mid-West will be greatest for Electricians, which is projected to peak at more than 7,000 next year (Chart 38). Separately, industrial development in the region will also drive the need for Concrete Finishers/Cement Masons, which will see a peak industrial demand of 6,600 craftsmen toward the end of this year (Appendix D). It should be noted that these estimates will rise further as the CLMA®’s industrial database continues to expand.

29



Source: CLMA®

Chart 41IRONWORKER/WELDER (Structural)Demand by Quarter (Industrial Projects): Atlantic Mid-West

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 42LABORERDemand by Quarter (Industrial Projects): Atlantic Mid-West

3,000

2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 43MILLWRIGHTDemand by Quarter (Industrial Projects): Atlantic Mid-West

6,000

5,000

4,000

3,000

2,000

1,000

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 44OPERATING ENGINEERDemand by Quarter (Industrial Projects): Atlantic Mid-West

4,000

2,0002,5003,0003,500

1,5001,000

5000

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 45PAINTER Demand by Quarter (Industrial Projects): Atlantic Mid-West

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 46PIPEFITTERDemand by Quarter (Industrial Projects): Atlantic Mid-West

3,000

2,500

2,000

1,500

1,000

500

020

13Q

120

13Q

220

13Q

320

13Q

420

14Q

120

14Q

220

14Q

320

14Q

420

15Q

120

15Q

220

15Q

320

15Q

420

16Q

120

16Q

220

16Q

320

16Q

420

17Q

120

17Q

220

17Q

320

17Q

4

Source: CLMA®

Chart 47PIPEFITTER/COMBO WELDERDemand by Quarter (Industrial Projects): Atlantic Mid-West

3,000

2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

Source: CLMA®

Chart 48SHEET METAL WORKERDemand by Quarter (Industrial Projects): Atlantic Mid-West

2,500

2,000

1,500

1,000

500

0

2013

Q1

2013

Q2

2013

Q3

2013

Q4

2014

Q1

2014

Q2

2014

Q3

2014

Q4

2015

Q1

2015

Q2

2015

Q3

2015

Q4

2016

Q1

2016

Q2

2016

Q3

2016

Q4

2017

Q1

2017

Q2

2017

Q3

2017

Q4

30

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HOW WILL YOU RESPOND?

www.myCLMA.com

Owners with significant capital projects are concerned how the availability of skilled craft labor in the construction industry will impact their projects. With more experienced workers retiring or leaving the industry, the problem continues to be significant.

IDENTIFY.

RECRUIT.

TRAIN.

RETAIN.

CONCLUSION

The U.S. economy is expanding, the oil and gas industry is booming, construction activity is rising...and while looming risks threaten to derail near-term growth, the long-term outlook is promising. In just the next five years, at least $2.3 trillion in planned nonresidential construction spending will be realized nationwide and this in turn will drive the need for 6.8 million or more construction tradesmen by 2017. With the demand for skilled construction workers escalating exponentially among some sectors, such as oil and gas, concerns of impending labor shortages are warranted.

Today, the nation’s nonresidential construction labor force stands at an estimated 4.5 to 5.0 million workers. Unless the industry responds quickly with new training and incentive programs, a gap of two million or more tradesmen may develop in the U.S.

within the next five years, which will only intensify as skilled baby boomers continue to retire. Even now, contractors are beginning to warn of shortages and with demand for more than five million workers by the end of this year, it is no surprise that staffing issues are already developing.

Driven by these concerns, construction owners will demand action. Without prudent planning, executives, developers, and project managers can expect the lack of available skilled labor to result in rising project costs and/or delayed (and in some cases, cancelled) projects. In order to avoid such a situation and minimize the risks associated with labor availability, a combination of training, incentives, and use of the CLMA® to identify the need will be essential.

www.myCLMA.com

31

Most owners understand that effective front-end planning is essential for successful projects. Many have established corporate requirements for completing a certain level of project planning before projects can be funded. Project teams are finalized. Contracting approaches and supply chains are established. Cost, schedule, safety and quality systems are implemented. Engineering presentations (BIM, etc.) and the use of prefabrication or modularization are decided. With these important issues determined, the project can be executed with confidence.

However, before projects are started, construction labor workforce planning is also an essential part of the front end planning process (FEL-1 and forward) for owners to achieve projects successfully.

While the workforce has not been a pressing issue for many during the recent downturn, there are growing shortages of skilled labor in the Southeast, Gulf Coast, Mid-West, North Dakota and other areas. As the economy recovers the availability of skilled construction workers is declining. Baby Boomers are retiring, unemployed workers are leaving the industry for jobs perceived to be more stable and many are now working in the growing oil and gas exploration field. On the other hand, recruiting and training programs have been reduced and limited employment opportunities and cultural changes have reduced the number of entries into the construction industry.

In the recent construction labor shortage crisis (~2006-2008), many owners experienced significant cost and schedule increases for their projects as higher wages, incentives and overtime were required to staff their projects. In some cases, startups were delayed and some projects were postponed or cancelled. To avoid future missed budgets and schedules, it is essential that owners have better

data on labor supply and demand and use that data in an effective workforce plan for the project before funding.

What are the basic steps of project planning? How does workforce planning fit in and help control risk?

1. Identify the project goals and objectives

2. Develop the project scope required to meet the objectives

3. Estimate the resources required

4. Develop initial plans for execution

5. Consider alternate approaches

6. Finalize the plans

Workforce planning for upcoming construction should be included in steps 3 thru 5. After the objectives are established and rough scope identified

estimating the construction labor resources required can begin. Traditional estimating focuses on the craft hours required; workforce planning determines how many of each specific craft will be needed and when they will be needed.

The Construction Labor Market Analyzer® (CLMA®, w w w . m y C L M A . c o m ) is a sophisticated, not complicated tool to help you with workforce planning. It has a built-in Project Labor Forecaster® — a series of algorithms that can quickly and easily create craft requirement curves using your projects’ early cost estimate

and schedule. The algorithms are customized for the type of project (industrial, power, manufacturing, process, heavy civil, commercial, etc.) and proven by owners and contractors. There are currently about 100 project types included in the CLMA® with more under development.

How owners & contractors use the Construction Labor Market Analyzer® to improve their project results in an uncertain construction labor market

WORKFORCE PLANNINGRisk Management for Successful Projects

CLICK HERE TO LEARN MORECLICK HERE TO LEARN MORE

Look for this icon on our website to calculate your potential savings.



32

With the initial craft requirements curve for the project, the impact of local labor supply and demand can be evaluated immediately. The CLMA® will overlay your project craft requirements on the current labor market supply and demand in the region of your project. Instantly, you can identify any potential issues with craft availability that could affect your project cost and schedule. These tools are available to owners, contractors and unions.

If no problems are identified, then you will have increased confidence that you will be able to execute the project as planned without major labor issues.

On the other hand, if the CLMA® demand information indicates conflicts with the labor availability, then you can identify opportunities to mitigate risk or eliminate the issues. For example:

• Schedule Alternatives – Some projects have the flexibility to change the project schedule and complete the construction work earlier or later to avoid labor peaks on other projects. This is a common first approach.

• Construction Alternatives – Prefabrication or modularization may reduce your need for on-site skilled labor. Moving some of the detailed assembly to other locations with sufficient craft skills is frequently used to reduce the impact of craft shortages.

• Contracting Alternatives – Some projects use more subcontractors with their dedicated workforces to reduce the need for recruiting workers from the general industry pool.

Finally, if the skilled craft workforce shortages are difficult or impossible to avoid, you can adjust your estimated labor costs in your budget to recognize the potential higher costs that will be required to attract sufficient skilled labor. Approaches like more overtime, higher wages, per diems and other incentive bonuses have been used to attract labor in difficult situations. The advantage now is that you will be more aware of these costs and include them in your budgets, rather than identifying them later during the project as cost overruns.

So whether you use workforce planning to adjust your execution plan or to adjust your budget and schedule, you will have more confidence in your ability to deliver the project; and you are much more likely to achieve the objectives when you use the CLMA® for effective early front-end project planning.

For more information and to get started, visit www.myCLMA.com

WE PLACE GREAT VALUE ON THE

CLMA® AND ARE RELYING ON THE

INFORMATION IT PROVIDES FOR

IMPORTANT STRATEGY GUIDANCE

AND DEVELOPMENT.

Eddie ClaytonPlanned Outage

& Labor Manager

THE CLMA® IS THE FIRST TOOL

DEPLOYED INDUSTRY-WIDE THAT

ALLOWS THE LABOR COMPONENT

OF A PROJECT TO BE PLANNED

AND MANAGED.

James PorterChief Engineer & Vice-President (ret.)

Engineering & Operations



33


Appendix A:

2013-2017 Skilled Labor Demand by Craft (All Projects): United States

Appendix B:

2013-2017 Skilled Labor Demand by Craft (Industrial Projects): United States

Appendix C:

2013-2017 Skilled Labor Demand by Craft (All Projects): Atlantic Mid-West

Appendix D:

2013 - 2017 Skilled Labor Demand by Craft (Industrial Projects): Atlantic Mid-West

Appendix E:

2013-2017 Skilled Labor Demand by State (All Projects): Atlantic Mid-West

Appendix F:

2013-2017 Skilled Labor Demand by State (Industrial Projects): Atlantic Mid-West

Appendix G:

State-by-State Demand/Supply Rankings

Appendix H:

CLMA® Craft Titles & Definitions

APPENDICES

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FACING A WORKFORCE SHORTAGE.

PLAN NOW.

The CLMA 20/20 Foresight Report

Q1, 2012

ARE YOU READY?1

2

3

4

5

6

7

2020

The CLMA 20/20 Foresight Report

Mid-Year, 2012Prepared for:

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2012-2017

SOUTHEAST

UNITED STATES

LABOR MARKET

DEMAND:

AL - AR - FL - GA - KY - LA - MS - NC - SC - TN - TX - VA

SKILLED WORKER SHORTAGES EMERGE

United States Energy Boom Increases Demand

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19th Century

20th Century

Today:Growing Energy Source

25%+

U.S. Southeast Region Labor Market Analysis, 2013 - 2017

SPRING 2013

Nat

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Gas

Util

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ion

Tomorrow:Economic Growthand Jobs

Construction Labor Market Analyzer®20/20 FORESIGHT REPORT

We’re redefining construction labor market intel ligence.


34

Ap

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A: 2

013-

2017

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La

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14Q

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Ap

pe

ndix

D: 2

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2017

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320

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38

Ap

pe

ndix

E: 2

013-

2017

Ski

lled

La

bo

r De

ma

nd b

y St

ate

(A

ll Pr

oje

cts

): A

tlant

ic M

id-W

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Stat

e20

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120

13Q

220

13Q

320

13Q

420

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120

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120

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220

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320

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120

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17Q

120

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120

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320

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Appendix G: State-by-State Demand/Supply Rankings

Traditional Construction Occupations 2012 Base PeakPeak

QuarterBase to

Peak RankBoilermaker/Boilermaker Welder 750 1,756 2016Q2 2Insulator 1,530 5,440 2016Q3 2Ironworker (Reinforcing) 510 7,158 2014Q4 2Ironworker / Welder (Structural) 3,090 6,272 2017Q4 2Laborer 42,030 52,780 2017Q3 2Operator (Heavy Equipment) 12,440 20,205 2017Q3 2Pipefitter (All & Plumber) 13,160 16,379 2015Q4 2Sheet Metal Worker 5,100 6,253 2017Q4 2Carpenter (All Unspecified, Finishing & Scaffold Builder) 23,620 17,883 2017Q2 1Craft Helper 20,370 683 2015Q2 1Electrician 23,740 15,400 2015Q1 1Operator (Driller and Blaster) 410 0 N/A 1Operator (Rotary Driller Oil & Gas) 670 0 N/A 1Painter 7,870 6,031 2016Q3 1

Related OccupationsOperator (Heavy Crane) 1,160 1,784 2015Q3 2Millwright 18,540 1,542 2015Q4 1Operator (Heavy Equipment Mechanic) 2,090 0 N/A 1Operator (Material Handler) 126,780 40 2014Q1 1

Base to Peak Ranking "0": unknown, information not available "1": ample supply, no shortages currently anticipated "2": potential shortages apparent

ILLINOIS


QuarterBase to

Peak RankCarpenter (All Unspecified, Finishing & Scaffold Builder) 13,020 15,706 2017Q3 2Insulator 740 5,250 2015Q3 2Ironworker (Reinforcing) 160 6,753 2014Q1 2Ironworker / Welder (Structural) 1,540 5,875 2017Q3 2Laborer 14,920 41,533 2017Q3 2Operator (Heavy Equipment) 10,590 17,796 2017Q3 2Painter 3,710 6,266 2015Q2 2Pipefitter (All & Plumber) 10,880 16,672 2015Q2 2Sheet Metal Worker 3,180 5,975 2014Q4 2Boilermaker/Boilermaker Welder 3,080 668 2017Q4 1Craft Helper 11,320 539 2014Q3 1Electrician 13,440 12,952 2015Q3 1Operator (Driller and Blaster) 730 0 N/A 1Operator (Rotary Driller Oil & Gas) 0 0 N/A 1

Related OccupationsMillwright 15,840 883 2015Q3 1Operator (Heavy Crane) 2,210 1,327 2014Q4 1Operator (Heavy Equipment Mechanic) 2,370 0 N/A 1Operator (Material Handler) 60,180 97 2013Q4 1


INDIANA

POTEN

TIAL SH

ORTAG

E A

PPAREN

T*PO

TENTIA

L SHO

RTAGE

APPA

RENT*

*


QuarterBase to




OHIO

40


QuarterBase to

Peak RankBoilermaker/Boilermaker Welder 0 697 2015Q2 2Insulator 350 2,896 2016Q1 2Ironworker (Reinforcing) 100 3,397 2014Q2 2Ironworker / Welder (Structural) 860 3,364 2015Q1 2Laborer 16,320 25,923 2016Q3 2Operator (Heavy Equipment) 6,270 9,833 2016Q3 2Sheet Metal Worker 2,860 3,170 2014Q3 2Carpenter (All Unspecified, Finishing & Scaffold Builder) 11,360 10,747 2014Q3 1Craft Helper 13,520 268 2014Q2 1Electrician 11,800 6,847 2015Q3 1Operator (Driller and Blaster) 80 0 N/A 1Operator (Rotary Driller Oil & Gas) 80 0 N/A 1Painter 4,160 3,238 2015Q4 1Pipefitter (All & Plumber) 10,960 8,801 2015Q4 1

Related OccupationsOperator (Heavy Crane) 510 854 2015Q2 2Millwright 4,560 444 2015Q4 1Operator (Heavy Equipment Mechanic) 1,800 0 N/A 1Operator (Material Handler) 32,760 33 2013Q4 1


MARYLAND


QuarterBase to

Peak RankBoilermaker/Boilermaker Welder 460 662 2014Q1 2Carpenter (All Unspecified, Finishing & Scaffold Builder) 12,330 13,341 2016Q2 2Insulator 480 4,136 2014Q3 2Ironworker (Reinforcing) 0 6,244 2013Q4 2Ironworker / Welder (Structural) 1,000 6,109 2013Q3 2Laborer 20,410 40,676 2017Q2 2Operator (Heavy Equipment) 8,290 16,500 2017Q3 2Painter 3,460 4,906 2014Q3 2Pipefitter (All & Plumber) 10,610 13,237 2014Q3 2Sheet Metal Worker 3,550 4,727 2017Q4 2Craft Helper 9,080 583 2014Q1 1Electrician 17,890 10,630 2014Q3 1Operator (Driller and Blaster) 320 0 N/A 1Operator (Rotary Driller Oil & Gas) 660 0 N/A 1

Related OccupationsOperator (Heavy Crane) 740 1,049 2014Q1 2Millwright 18,940 1,159 2013Q2 1Operator (Heavy Equipment Mechanic) 2,460 0 N/A 1Operator (Material Handler) 59,760 125 2013Q4 1


MICHIGAN

POTEN

TIAL

SHO

RTAGE

APPA

RENT*

POTEN

TIAL SH

ORTAG

E A

PPAREN

T*

**


QuarterBase to




OHIO

41



QuarterBase to

Peak RankInsulator 660 8,132 2017Q4 2Ironworker (Reinforcing) 1,180 10,348 2014Q1 2Ironworker / Welder (Structural) 4,080 10,343 2017Q1 2Laborer 49,860 56,345 2017Q3 2Operator (Heavy Equipment) 17,510 24,208 2017Q3 2Pipefitter (All & Plumber) 21,580 26,574 2016Q4 2Sheet Metal Worker 5,460 11,469 2016Q1 2Boilermaker/Boilermaker Welder 590 553 2016Q1 1Carpenter (All Unspecified, Finishing & Scaffold Builder) 44,990 35,961 2014Q1 1Craft Helper 38,540 418 2013Q2 1Electrician 33,530 20,914 2016Q1 1Operator (Driller and Blaster) 480 0 N/A 1Operator (Rotary Driller Oil & Gas) 70 0 N/A 1Painter 11,840 10,633 2015Q2 1

Related OccupationsOperator (Heavy Crane) 930 2,333 2017Q1 2Millwright 14,330 1,260 2017Q4 1Operator (Heavy Equipment Mechanic) 2,440 0 N/A 1Operator (Material Handler) 87,640 65 2013Q4 1


NEW YORK


QuarterBase to




OHIO

POTEN

TIAL SH

ORTAG

E A

PPAREN

T*

POTEN

TIAL

SHO

RTAGE

APPA

RENT*

*


QuarterBase to




OHIO

42


QuarterBase to

Peak RankBoilermaker/Boilermaker Welder 720 1,115 2015Q2 2Insulator 310 5,089 2015Q4 2Ironworker (Reinforcing) 360 6,705 2017Q4 2Ironworker / Welder (Structural) 1,850 6,957 2016Q4 2Laborer 32,640 51,733 2017Q3 2Painter 5,720 6,818 2015Q2 2Pipefitter (All & Plumber) 16,260 17,559 2015Q1 2Sheet Metal Worker 5,000 6,752 2017Q4 2Carpenter (All Unspecified, Finishing & Scaffold Builder) 34,870 20,332 2017Q4 1Craft Helper 29,040 678 2014Q2 1Electrician 20,320 13,414 2015Q1 1Operator (Driller and Blaster) 1,290 0 N/A 1Operator (Heavy Equipment) 24,750 20,870 2017Q3 1Operator (Rotary Driller Oil & Gas) 4,560 0 N/A 1

Related OccupationsMillwright 22,120 1,073 2013Q4 1Operator (Heavy Crane) 1,940 1,499 2014Q2 1Operator (Heavy Equipment Mechanic) 4,430 0 N/A 1Operator (Material Handler) 104,860 49 2013Q4 1


PENNSYLVANIA


QuarterBase to

Peak RankBoilermaker/Boilermaker Welder 0 261 2013Q3 2Insulator 360 1,675 2014Q3 2Ironworker (Reinforcing) 0 1,421 2013Q4 2Ironworker / Welder (Structural) 400 1,510 2013Q4 2Laborer 8,210 8,921 2017Q3 2Painter 740 2,341 2014Q3 2Pipefitter (All & Plumber) 2,000 4,606 2014Q2 2Sheet Metal Worker 940 1,947 2014Q1 2Carpenter (All Unspecified, Finishing & Scaffold Builder) 3,690 3,429 2016Q4 1Craft Helper 9,380 609 2013Q2 1Electrician 4,700 3,502 2014Q1 1Operator (Driller and Blaster) 500 0 N/A 1Operator (Heavy Equipment) 10,730 4,415 2017Q3 1Operator (Rotary Driller Oil & Gas) 1,530 0 N/A 1

Related OccupationsMillwright 3,390 908 2013Q3 1Operator (Heavy Crane) 890 524 2014Q1 1Operator (Heavy Equipment Mechanic) 1,920 0 N/A 1Operator (Material Handler) 12,180 0 N/A 1


WEST VIRGINIA

POTEN

TIAL SH

ORTAG

E A

PPAREN

T*PO

TENTIA

L SHO

RTAGE

APPA

RENT*


QuarterBase to




OHIO

43


POTEN

TIAL SH

ORTAG

E A

PPAREN

T*

*


QuarterBase to

Peak RankElectrician 9,070 9,095 2017Q3 2Insulator 660 3,326 2016Q1 2Ironworker (Reinforcing) 320 4,667 2014Q4 2Ironworker / Welder (Structural) 710 3,816 2016Q4 2Laborer 10,910 27,062 2017Q3 2Operator (Heavy Equipment) 6,800 13,102 2017Q3 2Painter 2,890 4,276 2015Q4 2Pipefitter (All & Plumber) 6,420 11,483 2015Q4 2Boilermaker/Boilermaker Welder 310 190 2016Q1 1Carpenter (All Unspecified, Finishing & Scaffold Builder) 13,200 11,935 2017Q3 1Craft Helper 10,150 140 2013Q2 1Operator (Driller and Blaster) 390 0 N/A 1Operator (Rotary Driller Oil & Gas) 0 0 N/A 1Sheet Metal Worker 4,310 4,016 2017Q4 1

Related OccupationsOperator (Heavy Crane) 680 733 2017Q3 2Millwright 13,000 233 2013Q1 1Operator (Heavy Equipment Mechanic) 2,070 0 N/A 1Operator (Material Handler) 49,560 32 2013Q2 1


WISCONSIN


QuarterBase to




OHIO

Boilermaker Boilermakers fabricate, assemble, erect, test, maintain and repair boilers, vessels, tanks, towers, heat exchangers and other heavy-metal structures. Example Titles: Boilermaker, Boiler Fitter, Boiler Installer, Construction Boilermaker, Industrial Boilermaker, Marine Boilermaker, Pressure Vessel FabricatorBoilermaker Welder Boilermaker Welders weld piping and other heavy-metal structures in support of boilermaker work operations. Example Titles: Boilermaker Welder, Boilermaker Welder FitterBricklayer/ Blockmason Bricklayers lay bricks, concrete blocks, stone and other similar materials to construct or repair walls, arches, chimneys, fireplaces and other structures in accordance with blueprints and specifications. Segmental pavers cut, place, and arrange a variety of finished masonry such as brick and concrete in order to create paths, patios, driveways, and steps. Example Titles: Bricklayer, Brickmason, Refractory Bricklayer, Stonecutter, Blockmason, Stonemason, Segmental PaversCarpenter (Finishing) Finish carpenters, cabinetmakers and millworkers make and install wood products–including moldings, panels, and furniture–and fixtures of metal, plastic, and glass. Experts at operating many machines and using many tools, they also create the details and craftsmanship found in woodwork, cabinetry, and décor. Example Titles: Cabinetmaker, Millworker, Finish CarpenterCarpenter (Floor Covering Installer) Floor covering installers install carpet, wood, linoleum, vinyl and other resilient floor coverings in residential, commercial, industrial and institutional buildings.Example Titles: Carpet Installer, Carpet Layer, Floor Covering Installer, Floor Covering Mechanic, Resilient Floor Installer, Rug Installer, Vinyl Floor InstallerCarpenter (Interior Systems) Interior systems carpenters install drywall, acoustical ceilings, metal framing, wall partitions, office furniture systems, and other materials, equipment, and factory-produced systems.Example Titles: Carpenter, Drywall Installer, Sheetrock Applicator, Ceiling Installer, Accoustical Ceiling Installer, Interior Systems MechanicCarpenter (Lather) Lathers use wire, screws, nails, clips, and staples to fasten metal studs, metal lath (strips that form latticework), and drywall. Lathers install support framework for ceiling systems, interior and exterior walls and building partitions. The framework built by lathers is covered by plaster, drywall materials, and other finished surfaces. Example Titles: Carpenter, Lather, Wood Lather

Carpenter (Pile Driver/ Operator) Pile drivers install piling to hold back the earth during excavations, to set up the foundation of skyscrapers and bridges, and to build docks and wharfs. Due to the wide range of work in this trade, many pile drivers are certified welders and capable of working with a variety of sizes and shapes of steel. Example Titles: Carpenter, Pile Driver, WelderCarpenter (Scaffold Building)Carpenters construct, erect, install, maintain and repair structures and components of structures made of wood, wood substitutes and other materials. Example Titles: Carpenter, Finish Carpenter, Rough Carpenter, Scaffold Builder, Maintenance Carpenter, Renovation Carpenter, Formwork Carpenter, Framing Carpenter, Ship’s CarpenterCarpenters (All Unspecified)This is a generic carpenter title that includes all carpenter specialties. Use this title when the carpenter specialities on the project are not known or not otherwise specified within another Carpenter title. Example Titles: Carpenter, Finish Carpenter, Rough Carpenter, Scaffold Builder, Maintenance Carpenter, Renovation Carpenter, Formwork Carpenter, Framing Carpenter, Ship’s Carpenter, Pile Driver, Welder, Lather, Wood Lather, Cabinetmaker, Millworker, Finish Carpenter, Drywall Installer, Sheetrock Applicator, Ceiling Installer, Accoustical Ceiling Installer, Interior Systems Mechanic, Carpet Installer, Carpet Layer, Floor Covering Installer, Floor Covering Mechanic, Resilient Floor Installer, Rug Installer, Vinyl Floor InstallerConcrete Finisher / Cement MasonCement masons mix, place and consolidate concrete. Concrete finishers smooth and finish freshly poured concrete, apply curing or surface treatments, and install, maintain and restore various masonry structures such as floors, ceilings, sidewalks, roads and patios. Example Titles: Concrete Finisher, Concrete Mason, Cement Mason, Precast Concrete Finisher, Flatwork FinisherElectricianThese electricians install, maintain, test, troubleshoot and repair industrial electrical equipment and associated electrical and electronic controls in commercial and industrial facilities. Example Titles: Industrial Electrician, Plant Electrician, Plant Maintenance Electrician, Mill Electrician, Mine Electrician, Shipyard Electrician, Marine ElectricianElevator Constructor & MechanicElevator constructors and mechanics assemble, install, maintain and repair freight and passenger elevators, escalators, moving walkways and other related equipment. Example Titles: Elevator Installer, Elevator Constructor, Elevator Mechanic, Escalator RepairerGlazierGlaziers cut, fit, install and replace glass in industrial, commercial and residential

buildings, on exterior walls of buildings and other structures. Example Titles: Glazier, Glazier and Metal Mechanic, Plate Glass Installer, Stained Glass Glazier, Structural Glass GlazierHVAC & Refrigeration MechanicHeating, air-conditioning, and refrigeration mechanics, installers, and technicians install, maintain, and repair heating, ventilation, air-conditioning, and refrigeration systems (HVACR systems) for commercial and industrial refrigeration and air conditioning systems and combined heating, ventilation and cooling systems, and residential central air conditioning systems. Example Titles: Central Air-conditioning Mechanic; Commercial Air-conditioning Mechanic; Heating and Cooling Mechanic; Heating, Ventilation and Air-conditioning (HVAC) Mechanic; Refrigeration Mechanic; Transport Refrigeration Mechanic; HVACR TechnicianInstrumentation TechnicianInstrumentation Technicians install, inspect, test, adjust, and repair electric, electronic, mechanical, and pneumatic instruments and systems in industrial facilities. Example Titles: Instrumentation Technician, Instrumentation Fitter, E&I TechnicianInsulatorInsulators apply insulation materials to plumbing, process, air-handling, heating, cooling and refrigeration systems, piping equipment and pressure vessels, and walls, floors and ceilings of buildings and other structures to prevent or reduce the passage of heat, cold, sound or fire. Example Titles: Boiler and Pipe Insulator, Building Insulator, Firestopping Insulator, Heat and Frost Insulator, Insulation Applicator, Insulation Mechanic, Insulator, Insulator Apprentice, Sound InsulatorIronworker - ReinforcingRebar ironworkers fabricate, tie and set reinforcing bar for concrete placements. Example Titles: Rebar Ironworker, IronworkerIronworker / Welder - StructuralStructural ironworkers place and install steel girders, columns, and other structural members to form completed structures or frameworks of buildings, bridges, and other structures. Example Titles: Ironworker, Steel Erector, Ornamental Ironworker, Metal Fabricator, Structural WelderCraft HelperConstruction helpers and laborers assist skilled tradespersons and perform general labor activities at construction sites.Example Titles: Laborer, General LaborerLaborerConstruction helpers and laborers assist skilled tradespersons and perform general labor activities at construction sites.Example Titles: Laborer, General LaborerLinemanElectric linemen install, relocate, or modify high-voltage electrical power lines that link utility grids to medium or low voltage

Appendix H: CLMA® Craft Titles & Definitions

45

distribution systems.Example Titles: Lineman, High-voltage ElectricianMachinistMachinists use machine tools to make or modify metal parts via machining. Example Titles: Machinist, CNC MachinistMillwrightConstruction millwrights and industrial mechanics install, maintain, troubleshoot and repair stationary industrial machinery and mechanical equipment.Example Titles: Construction Millwright, Industrial Mechanic, Maintenance Millwright, Millwright, Plant Equipment Mechanic, Treatment Plant MechanicOperator (Rotary Driller Oil & Gas)Rotary driller operators set up or operate a variety of drills to remove petroleum products from the earth and to find and remove core samples for testing during oil and gas exploration. Example Titles: Back-up Worker, Cable Driller, Cable Tool Driller, Cable Tool Operator, Clean-out Driller, Core Drill Operator, Core Driller, Drill Hand, Drill Operator, Driller, Drilling Machine Operator, Oil Driller, Oil Well Driller, Prospecting Driller, Rotary Driller, Rotary Rig Engine Operator, Shot Hole Driller, Spud Driller, Well DrillerOperator (Driller & Blaster)Drillers operate mobile drilling machines to bore blast holes for open-pit mines, quarries, road construction, and building foundations. Blasters fill blast holes with explosives and detonate explosives to dislodge coal, ore and rock or to demolish structures. Example Titles: Construction Blaster, Surface Mining Blaster, Driller, Construction Foundation Drill Operator, Open-pit Blaster, Open-pit Driller, Rotary Drilling Machine OperatorOperator (Heavy Crane)Crane operators operate cranes or draglines to lift, move, position or place machinery, equipment and other large objects at construction or industrial sites, ports, railway yards, surface mines and other similar locations. Example Titles: Crawler Crane Operator, Hydraulic Crane Operator, Boom Truck Crane Operator, Bridge Crane operator, Climbing Crane Operator, Construction Crane Operator, Crane Operator, Dragline Crane Operator, Gantry Crane Operator, Hoist Operator (except underground mining), Mobile Crane Operator, Tower Crane Operator, Tractor Crane OperatorOperator (Heavy Equipment Mechanic)Heavy-duty equipment mechanics repair, troubleshoot, adjust, overhaul and maintain mobile heavy-duty equipment used in construction, transportation, forestry, mining, oil and gas, material handling, landscaping, land clearing, farming and similar activities. Example Titles: Construction Equipment Mechanic, Diesel Mechanic – Heavy Equipment, Farm Equipment Mechanic, Heavy-duty Equipment Mechanic Apprentice,

Heavy-duty Equipment Technician, Heavy Equipment Mechanic, Heavy Mobile Logging Equipment Mechanic, Heavy Mobile Mining Equipment Mechanic, Locomotive Mechanic, Tractor MechanicOperator (Heavy Equipment)Heavy equipment operators operate heavy equipment used in the construction and maintenance of roads, bridges, airports, gas and oil pipelines, tunnels, buildings and other structures, in surface mining and quarrying activities. Example Titles: Backhoe Operator, Bulldozer Operator, Excavator Operator, Gradall Operator, Grader Operator, Heavy Equipment Operator, Loader Operator – Construction, Side Boom Tractor Operator, Surface Mining Equipment OperatorOperator (Truck Driver)Truck drivers operate heavy trucks to transport goods and materials over urban, and rural routes. Example Titles: Bulk Goods Truck Driver, Dump Truck Driver, Flatbed Truck Driver, Logging Truck Driver, Long-haul Truck Driver, Moving Van Driver, Tow Truck Driver, Truck Driver, Truck Driver – Heavy Truck, Truck Driver – Tractor-trailerOperator (Material Handlers)Material handlers operate forklifts, tractors, trucks and other motorized vehicles to off-load and transport materials at a construction site. Example Titles: Fork lift Driver, Hoist Operator PainterPainters and decorators apply paint, wallpaper and other finishes to interior and exterior surfaces of buildings and other structures. Example Titles: Construction Painter, Maintenance Painter, Painter, Painter and Decorator, PaperhangerPipefitter (Above Ground)Pipefitters and steamfitters layout, assemble, fabricate, maintain, troubleshoot and repair piping systems carrying water, steam, chemicals and fuel in heating, cooling, lubricating and other process piping systems. Example Titles: Pipefitter, Pipefitter-Steamfitter, Marine Pipefitter, SteamfitterPipefitter / Combo WelderPipe and combo welders fabricate components by welding, brazing, caulking, soldering, glueing or threading joints at industrial and commercial job sites. Example Titles: Pipe Welder, Combo Welder, Fabricator, GTAW, GMAW, FCAW & SAW Welder, Certified Pipe WelderPipefitter (Sprinkler Systems)Sprinkler system installers fabricate, install, test, maintain and repair water, foam, carbon dioxide and dry chemical sprinkler systems in buildings for fire protection purposes. Example Titles: Pipefitter, Sprinkler Fitter, Fire Sprinkler Fitter, Sprinkler System Fitter, Sprinkler System InstallerPipelayer (Underground)Pipelayers lay and join glazed clay, concrete, plastic, or cast-iron pipe for drains, sewers, water mains, and oil or gas lines. Pipelayers

prepare and grade the trenches either manually or with machines before laying the pipe. Example Titles: Pipelayer, PlumberPlasterer / Stucco MasonPlasterers apply finish and maintain and restore plaster or similar materials on interior and exterior walls, ceilings and building partitions to produce plain or decorative surfaces. Stucco masons apply plaster to interior walls and cement or stucco to exterior walls. Drywall finishers and tapers finish drywall sheets build, apply, or fasten interior and exterior wallboards or wall coverings in residential, commercial, and other structures. Example Titles: Drywall Applicator, Drywall Finisher, Drywall Taper, Plasterer, Stucco MasonPlumberPlumbers install and maintain plumbing, heating, drainage, water, and piping systems including associated fixtures and equipment. Example Titles: PlumberRooferRoofers install, repair or replace flat roofs and shingles, shakes or other roofing tiles on sloped roofs. Shinglers install and replace shingles, tiles and similar coverings on sloped roofs. Example Titles: Roofer, Asphalt Roofer, Built-up Roofer, Flat Roofer, Residential Steep Roofer, Shingler, Single-ply RooferSheet Metal WorkerSheet metal workers fabricate, assemble, install and repair sheet metal products including air handling ductwork. Example Titles: Sheet Metal Worker, Sheet Metal Fabricator, Sheet Metal Mechanic, Tinsmith, Duct WorkerTile / Marble SetterTilesetters cover interior and exterior walls, floors and ceilings with ceramic, marble and quarry tile, mosaics or terrazzo. Example Titles: Apprentice Tilesetter, Ceramic Tile Installer, Marble Setter, Terrazzo Polisher, Terrazzo Worker, Tile Installer, TilesetterOtherSkilled workers not included in the list above. Example Titles: Skilled workers not included in the list above

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There is a better way. Every once in a while innovation and need converge to produce a revolutionary solution. Sophisticated. Not complicated. The Construction Labor Market Analyzer® is that solution. Remember the skilled labor shortages of 2006-2008? Projects had significant budget and schedule increases because of severe labor shortages. High wages, incentives and overtime added cost. Startups were delayed. Quality, productivity and safety suffered. Some projects were cancelled or delayed. Many have forgotten. But what about the future? Industry experts are forecasting growing industrial and power project demand as oil and gas availability improves and manufacturing returns. Many already feel the pressure. So what’s different? Before, craft labor outlook data was questionable and expensive. Now the CLMA® provides instant labor market clarity enabling detailed project and human resource planning at reasonable cost. The CLMA® is a powerful, easy-to-use tool that produces actionable, real-time craft labor market intelligence for any area of the U.S. It enables current and early project workforce planning in a new and unique way. A better way. The CLMA®.


20/20FORESITEREPORT.

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We would like to assist by providing customized reporting for your particular state and/or region, as well as for any other labor market analysis relating to your specific construction projects and human resource needs.

For more information, contact Daniel Groves at [email protected] or (859)339-5071; or make requests at www.myCLMA.com by clicking Contact Us under the Support tab.

ACKNOWLEDGEMENTS.

The analysis in this report was provided by the following, specifically for the Construction Labor Market Analyzer® 20/20 Foresight Report at the request and under the direction of Construction Workforce Development Center Services, LLC.

Amy Tyrrell | Research Analyst | Washington, DCAnirban Basu | Economist | Sage Policy Group | Baltimore, MD

Construction Workforce Development Center Services, LLC

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