Ahistoric influx of federal stimulus and infrastructure funding, combined with the state’s full-court press for large battery manufacturing plants, is on a collision course with a widespread construction labor shortage.
That’s according to industry executives, who welcome long-term efforts to shore up the region’s talent pipeline through various workforce development programs, but acknowledge those initiatives will do little to resolve near-term capacity constraints to handle upcoming major construction projects.
Those projects range from large housing projects, a potential soccer stadium and a 12,000-capacity amphitheater in downtown Grand Rapids to LG Energy Solution Michigan Inc.’s $1.7 billion battery plant expansion in Holland and a planned $4 billion battery plant project in Big Rapids.
To top it off, local governments are preparing to spend or disburse hundreds of millions of federal dollars from the Infrastructure Investment and Jobs Act and the American Rescue Plan Act (ARPA).
“One of the things that keeps me up at night, having this much growth and with the ARPA: How are we going to be able to build and expand without the people in place?” said Jennifer Owens, president of Lakeshore Advantage Corp., the economic development organization for Ottawa and Allegan counties. “It definitely is a real issue, but it comes back to educating about those careers and about the pay, and educating our kids to choose them, as well as automating everything we can.”
Construction companies are increasingly pouring resources into exposing elementary and high school students to career paths in the industry, all while bolstering workforce development programs like the West Michigan Construction Institute.
However, these long-term investments for the industry do not solve short-term needs, said Greg George, president and CEO of the Associated Builders and Contractors (ABC) West Michigan chapter.
“Most ABC members we have are seeing a great pipeline of business through 2023 and 2024,” George said. “When you place that alongside the bigger projects like the amphitheater and soccer stadium, it’s great news for investment but there will probably be pressure put on timelines. Projects will get done, it just might take longer and get plugged into a different time frame.”
George estimates that most or all of ABC’s members have open positions right now and could expand and hire more people if they were available.
The construction industry would need to hire nearly 650,000 additional workers nationwide on top of the normal pace of hiring in 2022 to meet the demand for labor, according to a model developed earlier this year by the national ABC organization.
“Some (construction companies) are probably just getting more efficient with the technology they’re using and better at leveraging their technological resources so they’re having less changeovers and less on-the-spot fixes,” George said. “My gut is telling me they are leveraging what they can with technology or beginning to explore those avenues more than they have in the past.”
The worker shortage is more pronounced when it comes to skilled trades because it takes more time and training to secure necessary certifications, George said. More than 40 percent of the construction workforce growth over the past decade has consisted of low-skilled construction workers, who represent just 19 percent of the workforce, according to data from ABC.
“It’s a good time to be in the trades,” said Derek Hunderman, director of sales and operations at Feyen Zylstra LLC, a Walker-based electrical services and industrial technology firm. “Hiring in this marketplace in general is difficult, and I don’t think we’re alone. In the trades, electricians have been unicorns for a while, so that’s just continuing. Talent retention and workforce development becomes the secret sauce for those that will succeed.”
Ongoing efforts to expand workforce development programs and expose students to construction careers to solve the talent shortage need to expand, Hunderman said.
“There have been so many people out spreading that gospel for a long time,” he said. “We’ve engaged with schools numerous times throughout the years and worked with the West Michigan Construction Institute. I think the hope is that it has a huge impact, but we can’t do enough.”
Grand Rapids-based Rockford Construction Co. Inc. has quadrupled the size of its internship program, and has focused on recruiting college students earlier and offering interns jobs before they go into their senior year, said Shane Napper, president of the firm’s construction division. Rockford also focuses on recruiting people from underrepresented communities in construction, Napper said.
“Historically, construction was a fallback position if you couldn’t get another job,” Napper said. “It can’t be a fallback position any more, it’s got to be a primary.”
Many construction firms have started allowing jobs to go remote or on a hybrid basis because of competitive pressures, ABC’s George said. As well, for jobs that have to be done in the field, the industry has had to shift to allow for more flexible work schedules.
“A lot of the industry trains itself,” George said. “There is a lot of investment internally with companies. They invest in a construction worker and it’s just finding and competing with other industries at the same time. There are so many positions open we’re competing with.”
ARPA and advanced manufacturing
The school systems in Ottawa and Allegan counties have robust construction training programs, but more needs to be done to add to the skilled trades pipeline, said Lakeshore Advantage’s Owens, noting the incoming pressure from federal ARPA funding could further expand project pipelines. For example, Kent and Ottawa counties have each issued calls for proposals from entities that could use portions of the stimulus funding to help spur transformative projects. Those requests have included large-scale housing developments.
In addition to federal ARPA funding, state and local economic development officials have launched a full-throttled pursuit of large advanced manufacturing companies. That effort has included inventorying sites across the region that could support such projects. However, even if they’re successful in securing those projects, such as the major battery manufacturing plant Gotion announced in Big Rapids, it remains unclear whether the lack of construction labor might disrupt timelines.
“There are so many highly skilled trades that will be involved in (the battery plant projects) from multiple companies in Michigan,” George said. “I assume the timeline will just get adjusted in the market. I’m always impressed by how much gets done with the amount of workers we have. They keep getting more efficient with massive projects.”
In addition to the labor shortage, the industry also is grappling with long lead times on essential materials for projects. The longest lead times recently have involved securing electrical components for projects.
“We’re able to navigate that for the most part because the marketplace is starting to understand that you need to start a project with an electrician early,” Hunderman said. “It’s educating the market about the dynamics at play. It’s a reasonable assumption that it all comes down to timing. The large battery plant in Holland is not a job that happens in just a few months; it is spread out over time.”