Construction industry faces shortage of trained help

Real Estate Weekly, Nov 13, 1996

CFMA polled 5,950 companies in addition to their 3,200 general members. The total number of respondents was 1,009. Participants represent experienced and well-established contractors, with 67 percent operating for more than 20 years. Eighty-seven percent of those polled provided detailed financial information, and 67 percent participated in last year's survey.

"The survey findings highlight an ongoing problem in the industry - attracting qualified people," said Steven D. Lords, national president of the CFMA, which conducted the survey for the eighth year. "We need to focus additional energy and resources on this labor shortage. The need will only continue to grow as the economy improves and construction revenues climb."

Overall, 58 percent of survey participants expect an increase in next year's volume of contract revenues. This is up from 1995 and edging closer to the 64 percent positive response rate received in 1994. The percentage of respondents expecting the volume of work to remain constant dropped from 28 percent in 1995 to 24 percent this year, and 18 percent anticipate a decrease.

Another positive sign is the continued increase in order backlog, with 53 percent of respondents indicating growth in that area. Average backlog volume jumped from over $42.72 million in 1995 to over $54.2 million this year, a 27 percent increase.

Other key findings from this year's CFMA survey include:

Top Three Challenges: After "shortage of field help," the second and third most common responses were "sources of future work," cited by 43 percent of the respondents, and "litigation," cited by 31 percent. Shortly following these were "workers" comp. insurance costs" and "safety/OSRA."

Available Credit: While 56 percent of respondents said there was more credit now available to their company than last year, this represents a drop from 1995, when 84 percent reflected an increase from 1994. Credit availability doesn't seem to be an obstacle, however, as 42 percent also reported an increase in their working capital line.

Competition: Respondents expect competition from foreign contractors to drop in the upcoming year. U.S. contractors continue to pose the largest threat, with 70 percent of respondents seeing their peers as the prima ry source of competition.

Cost of Insurance: On average, participants report spending a total of 20 percent of payroll on insurance costs. Nine percent goes to coverage for workers' compensation, seven percent to healthcare coverage and four percent to general liability insur ance. Respondents also reported experienc ing a drop in the number and costs of workers' compensation claims in 1990. The average number of claims for respondent this year was 25, down from 34 in 1995; the average claim dropped seven percent from $4,287 to $3,991 in 1996.

Substance Abuse Testing: There has been a threefold increase in substance abuse testing since the first CFMA survey, when less than one quarter of respondents had such a program. This year, 69 percent report maintaining vigorous substance abuse activities, with Heavy & Highway and Specialty Trades divisions reporting the most vigilance.