THE FUTURE OF U.S. SKILLED LABOR Daniel Groves, CLMA/CURT October - PowerPoint PPT Presentation

THE FUTURE OF U.S. SKILLED LABOR Daniel Groves, CLMA/CURT October 2016 Construction Industry Resources

LABOR GAP OUTLOOK Supply & Demand United States 8 $800 7 $700 6 $600 5 $500 Millions Billions 4 $400 3 $300 2 $200 1 $100 - $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Spending Demand Forecast BLS Supply Net Employment Data represents all non-residential construction Construction Industry Resources 2

LABOR GAP OUTLOOK Supply & Demand Southeast Region 3.0 $100 $90 2.5 $80 $70 2.0 $60 Millions Billions 1.5 $50 $40 1.0 $30 $20 0.5 $10 0.0 $0 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 Spending Demand Forecast BLS Supply Net Employment Data represents all non-residential construction Construction Industry Resources 3

CRAFT WORKER DEMOGRAPHICS Age Distribution of Employed Construction Workers 100% 50 Increases over 80% 90% 48 % of Employed Construction Workers 80% 46 44 70% 44 43 60% 42 Average Age 36 50% 40 40% 38 30% 36 20% 34 10% 32 Decreases nearly 40% 0% 30 2005 2010 2015 2020 2025 2030 Ages 16-24 Ages 25-54 Ages 55+ Avg. Age Construction Industry Resources 4

PROJECTED ATTRITION Attrition Of Industrial Craft Workers & Professionals 42% 15 38% 29% Attrition (Years) 10 26% 18% 5 16% 12% 2 10% 0% 5% 10% 15% 20% 25% 30% 35% 40% 45% Construction Professionals (Retire at 64) Industrial Craft Workers (Retire at 61) Construction Industry Resources 5

LABOR SHORTAGE CHALLENGES What was the impact of the skilled labor shortages/challenges on your project(s)? 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Increased Lower Lower More Longer More safety Project start Project labor cost productivity quality rework schedules incidents delays cancellations 2004-2009 2011 2012 2014-2015 Construction Industry Resources 6

LABOR SHORTAGE IMPACT ON PROJECTS Is there a demographic craft labor cliff that will affect project performance? CII RT 318, Aug 2015 OSHA RECORDABLE CRAFT LABOR AVERAGE AVERAGE INCIDENT CASES STAFFING DIFFICULTY COST CHANGE SCHEDULE CHANGE (PER 200,000 HOURS) 17.3 % 22.5% 0.94 Moderate - Severe (8.4%, 26.2%) (11.5%, 33.4%) (0, 2.84) 3.2 % 12.8 % 0.43 Slight (-0.9%, 7.3%) (7.7%, 17.9%) (0, 1.72) -6.2 % 6.4 % 0.26 No Difficulty (-10.7%, -1.8%) (1%, 11.8%) (0, 1.25) Construction Industry Resources 7

CRAFT WAGES & OPPORTUNITIES Annual Change in Average Base Wages 3.5% 3.25% 3.22% 3.0% 3.17% 2.72% 2.67% 2.70% 2.99% 2.50% 2.46% 2.37% 2.5% 2.28% 2.56% 2.55% 2.51% 2.24% 2.24% 2.0% 2.15% 2.13% 1.45% 1.5% 1.23% 1.11% 1.0% 0.61% 0.5% 0.0% 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 National Average Texas & Louisiana Blended Disclaimer: The wage rates shown on this slide are blended forecasts based on multiple job skills and should not be used by individual facilities to predict future wages for a specific job category. Construction Industry Resources 8

PRODUCTIVITY PERFORMANCE 1% increase in productivity (construction cost reduction) saves an estimated $100B Globally $7B U.S. Source: Global Vantage, Compustat, Bloomberg, National Bureau of Economic Research, BCG analysis Construction Industry Resources 9

PRODUCTIVITY IMPROVEMENT 1 Attract & retain skilled talent 2 Embrace “lean” construction principles 3 Early project planning 4 Optimized design & construction process 5 Increase pace of innovation adoption Construction Industry Resources 10

WORKFORCE INVESTMENT ROI Research demonstrated high value by investing 1.0% of the total project labor budget in workforce development AVERAGE IMPROVEMENT CII RT 231 SUMMARY Capital Projects Maintenance Projects Productivity 11 % 10 % Turnover Cost 14 % 14 % Absenteeism 15 % 15 % Injury 26 % 27 % Rework 23 % 26 % $1.00 invested ≈ $3.00 ROI Construction Industry Resources 11

OWNERS’ SAFETY TRAJECTORY IMPACT Industry Average Total Recordable Incidence Rate 1989-2013 16 14.3 14 12 10 TRIR 8 6 3.6 4 2 0 OSHA enforced rules CURT’s Owner Safety Blueprint Issued • Accelerating Factors • Common Language & Definition Phillips 66 chemical plant explosion • Shift Cultural Mindset • Lagging Indicators > Leading Indicators Construction Industry Resources 12

OWNERS’ WORKFORCE RECOMMENDATION “Owners should only do business with contractors who invest in training and maintain the skills of their workforce .” Construction Industry Resources 13

WHY SHOULD YOU CARE? Cost / Budget Economic Growth Leadership / Influence Construction Industry Resources 14

SUMMARY • Robust construction activity expected even with economic turbulence • Labor shortages will impact projects • Industry solutions available, but owners must lead • How & why should you respond? Construction Industry Resources 15

Daniel Groves (859) 339-5071 | dgroves@myCLMA.com www.ConstructionIndustryResources.com Construction Industry Resources October 2016