over the next 7 years, approximately 40 million baby boomers will retire, but only 22 million millennials are entering the work force. Te 23-35 year-olds that make up the classification of “millennials” are not only untrained in the trades, they lack an interest, or an appreciation, for either construction or any other trade-related field. Tis shift has created a huge gap in the workforce that will take years to recover from. Since our 2008 decline, the rebuilding of the Construction workforce has been made up entirely of new immigrants entering our labor force. In California, 53% of that immigrant labor force was born in Mexico. During the last 8 years, our region has created six times more jobs than homes, again creating an affordability gap making it even more difficult to “retain” those workers already hired.
While the discrepancy between available tradesmen and the rise in planned unit developments is likely the largest problem we are facing when it comes to building, we cannot discount the incredible impact of “Mother Nature”. Fires, Floods, Hurricanes and other extreme weather patterns have created havoc across the nation. Te Global Catastrophic Recap Report in November of 2018 reported, “the total aggregated
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economic losses for the California wildfires were expected to exceed $20 billion dollars for the losses of 2017-18.” Now we are witnessing the fall out of those fires with slow rebuilding, California’s complex and strict housing codes, increased cost of materials and lack of streamlined permit processes. Our building departments vary significantly from City to City and County to County, causing frustration, and significant delays. Tere is a wide disparity in fees, procedures, review processes and code compliance just to name a few of the issues; delays add to the already increasing costs previously addressed.
Another challenge contributing to the compounding issues is the cost of Materials.
Lumber prices change
day to day, along with aluminum, steel and oil-based products such as roofing materials. We are also facing challenges with political influences that will affect potential recessions and Tariff fees. In 2019, the ongoing lack of construction workers, plus higher cost of building materials, higher cost of land, and the ever-growing regulatory burdens associated with multi-family construction, leaves us with continued limitations on both new construction and reconstruction projects. Tis will force the construction industry to
become more efficient and improve productivity levels to mitigate construction inflation. We note it as the five L’s:
Labor, Lending, Lack of layout, Lumber issues and Laws.
So how can we begin the recovery process? Well, industry participants agree, “something will have to give!” New technology will play a bigger role, such as cameras with live feeds, software in the field, Exoskeleton suits, robotics and modular construction or
At the time of this writ- ing, our Government is shutdown with no imme- diate resolution in sight. Engineering News & Re- view January 2, 2019 re- ports, “If the Trade deals can’t be made and the pro- jection of volatility contin- ues to remain, many con- tractors will be squeezed by growing costs for materials and labor at a time when an extended trade war will likely undermine private- sector demand for con- struction”.
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