The five C’s of Arizona — copper, cattle, climate, cotton and citrus — have a long history of being the pillars that held up the state’s economy. Today, there is a new C that is driving the state’s growth: construction.
After an initial dip in business during the first wave of closures in March 2020, the construction market gained steam after Arizona Governor Doug Ducey classified the industry as essential.
“We didn’t know if everything was going to grind to a halt,” says Steve Whitworth, president of Kitchell. “When construction was deemed an essential business, things kept going. Our volume was a tick down from what we forecast for the year, but it was right there on par for where we were in 2019, so it didn’t set us backwards like we thought it could at the beginning of the pandemic.”
The growing need for new projects and tenant improvements is strong, with no signs of slowing. But can the construction industry keep pace with demand?
Great recession hangover
The No. 1 issue facing the construction industry is the lack of skilled labor, but this isn’t a new phenomenon. Since the Great Recession in the late 2000s, companies have struggled to recruit and retain workers.
“In 2008, when the economy took a big turn and the bubble popped, Arizona lost about 40,000 construction and skilled laborers who never came back. Our industry fought that for the last 12 years, and we’ve never made it back to the levels we had pre-2008,” notes Dave Tilson, vice president of business development at Renaissance Companies.
Many construction workers who found themselves unemployed took jobs elsewhere or left the industry altogether. Compounding the problem is the fact that Arizona was particularly hard hit by the recession, which meant a slower recovery compared with other states — one that it was still struggling with in early 2020.
“We were already dealing with a shortage of skilled labor going into the pandemic. Now, our concern is that, with the floodgates opening, it’s going to be even worse. There are a lot of mega-projects coming to the area that are going to require a great deal of resources and highly skilled labor. It’s going to be very competitive,” Whitworth explains.
This intense demand for new projects is cause for celebration when firms have the workers to fulfill the job safely and to exacting standards. Overstretching leads to sloppy work and possible reputational harm.
“This is the kind of thing that can hurt a business down the road because if we take on more than we can handle, it affects our reputation as being a company that can deliver a highly specialized, unique and exceptional product to our client,” says Dave Pisani, director of systems operations at Clearwing Systems Integration. “Where do we draw that line?”
The lack of candidates isn’t exclusive to just one segment of the industry or level of experience, either.
“We’re all struggling to find skilled and qualified staff, from the tradesmen all the way up through management, engineers and designers. Construction has a shortage of qualified individuals,” comments Korey Wilkes, principal architect at Butler Design Group.
Adding to the anxiety is the ballooning prices of materials, including steel, lumber and copper.
Adds Whitworth, “Labor and materials — what else is there? If both of those are a concern, then that’s a problem. On the positive side, we’re not looking at a 2008 situation. We’re going to solve the labor issues, we’re going to solve the materials issues, and we’re going to find a way to get it done.”
Finding labor is a challenge, but groundbreakings, ribbon-cuttings and everything in between are still happening throughout Arizona. If there’s a bright side to the labor shortage, it’s that companies have doubled down on the importance of investing in their workforce.
Two years ago, DP Electric started an internal employee development program called DP University. Dan Puente, founder and CEO of the company, explains, “We wanted to take the curriculum that the National Center for Construction Education and Research had and amend it to make our folks a little stronger, not only technically but also from a leadership perspective. It was important for us to develop these folks and make them a little more well-rounded.”
Creating an internal training system is not easy, but the return on the investment is worth the effort. For Pisani, training is essential. Most of his employees have backgrounds in entertainment production. They may know about the complex lighting and audio systems the company installs in schools, houses of worship and other large venues because they worked as roadies or sound engineers, but they’re less familiar with traditional construction concepts.
“We can’t rely on just finding these people with special skills, we have to create them,” Pisani remarks. “Part of our training initiative is doing just that — making the programs so we can help people get to where we want them to go. That’s the next step in our evolution.”
Other companies work with industry-specific organizations, such as the Arizona Builders Alliance (ABA) and the Associated General Contractors (AGC), to train their employees.
“We do a lot of work with the AGC and ABA to help continue to grow our trades professionals,” says Shelby Saifi, human resources director at Haydon Building Corp. “For example, we’ll send people to the Commercial Driver’s License program if they’re interested in operating that kind of machinery and employ them through that process.”
In addition, Haydon, as well as other firms such as Kitchell and Ryan Companies, offer internship programs that expose college students to the field and can lead to future employment.
“We have a robust intern academy, and we have about 15 or so college students that come work with us every summer,” Whitworth says. “We expose them to all areas of the business and hopefully bring them on full time when they’re done with their degree. The academy is a big part of our recruiting process.”
Haydon’s program offers opportunities mainly for students who are majoring in construction management or engineering. Interns spend their days out on a job site working with various team members on the project to see how each role contributes to the finished product.
Chuck Carefoot, senior vice president for Ryan Companies, says that because the labor market is tight, it’s important to invest in people early in their career to develop them for future roles. “We always look for a big crop of interns to start with, then hire at the entry-level position and place people with internal mentors to help them see a future with us and in the industry.”
For decades, construction jobs were seen as a reliable path to achieving the American Dream. When it became popular in secondary education to push everyone towards college, a career in the trades started to look less desirable.
“I think that our education system tends to drive people away from the trades by saying that they need to go to college,” Wilkes says. “And while that is great for some, being a tradesman earns a good living and is dignified work.”
Generational differences have also changed how construction companies approach recruiting talent. What motivates someone born in 1990 is different than what motivates someone born in 1970.
“It’s important for millennials to feel that the work that they’re doing is contributing to the greater good. It ties that extrinsic and intrinsic motivation together. If you provide that in any role, you’ll have happy employees who want to be successful,” Saifi explains.
Chelsea Porter, director of marketing at Renaissance Companies, adds that the generational mix can be beneficial for everyone involved. “You have your very traditional workers in the field who’ve worked their way up and bring a major skill set. Now we’re meshing those folks with these millennials who are tech savvy and think differently. Bridging that gap and teaching everyone to complement each other has been an interesting process, but I think it helps our company make sure we stay on the forefront as a general contractor.”
For many companies, addressing the labor shortage in the long term means working with teens — sometimes even younger — to raise awareness about construction as a rewarding career. For example, the nationwide ACE (Architecture. Construction. Engineering) Mentor Program Inc., connects high school students with contractors, architects and engineers who nurture the teens’ interest in the construction field.
Locally, Build Your Future Arizona (BYFAZ) is an initiative of the Phoenix Chamber Foundation that educates students about the opportunities available to them in the construction industry. Puente serves on its advisory board.
“The biggest thing young people and parents don’t understand is that construction is a rewarding career choice. The parents don’t realize that some of our senior field managers make six figures a year. A lot of times they assume you need to get a college education to make good money and have a steady job,” he says. “I think the industry will eventually make that shift and once again become desireable, but that’s not enough to deal with what we’re faced with right now.”