Planning is an essential part of success in any business. This is true for the newest startup company to those in business for generations. Effective strategic planning requires management to look beyond the four walls of the office to assess industry and market conditions in an effort to identify opportunities. Unfortunately for some construction companies, this can be a challenging task. Over the past few years, the industry has experienced significant changes including a growing number of new projects, a shrinking labor pool and the integration of technology across the project lifecycle. Paying attention to key trends will help prepare industry companies for expected changes that will have an impact. The Associated General Contractors of America’s, 2018 Construction Hiring and Business Outlook, provides access to key industry information for 2018 and beyond. To help clients and prospects understand the report, JLK Rosenberger has provided a summary of key details below.
Key Survey Information
There were over 1,000 firms that participated in the survey from 49 states and Washington DC. 30% of respondents reported revenue of less than $10M, 33% had revenues between 10.1M and $50M, 15% had between $100.1 to $150M, and 8% had over $500M worth of revenue. 33% of the companies surveyed reported they employ union workers most or all of the time, while the rest of respondents are either exclusively open or only occasionally use union labor.
- Areas of Concern – When asked about areas of concern, 41% of respondents indicated the workforce shortage is their most significant concern. Additional areas of concern were as follows: 39% stated competition for projects; 28% indicated growth in federal regulations; and 24% listed lack of infrastructure investment. 24% of contractors indicated the proliferation in state and local regulations is also a concern for 2018.
- Continued Growth Expected – Survey participants are optimistic about continued industry growth with 44% of respondents indicating they are very optimistic about the overall outlook for the industry. Specifically, 22% of respondents are most optimistic about the private office segment, followed by transportation and retail. 21% were most optimistic about water and sewer manufacturing, followed by 20% for schools and 17% for hospital and highway construction.
- Company Growth – A majority of the respondents reported they will continue to increase the staff headcount in 2018. 75% of respondents indicated they will continue to hire in 2018, which is a 2% increase from 2017. Most firms indicated they intend to expand the size of their firm by 10% or less. 5% of respondents indicated they would expand headcount by more than 25% above current levels. Only 3% of respondents expect to reduce headcount which is down 6% from the start of last year.
- Workforce Shortage Issues – Despite the trend towards growth, many firms expect it will be harder or more challenging to recruit and hire qualified workers in 2018. In fact, 82% of respondents indicated they expect the increased difficulty which is up from 76% from the beginning of last year. Beyond this, 78% of firms are currently experiencing problems finding qualified workers to hire, which has again increased over the prior year.
- Additional Employee Benefits – To help address workforce shortage issues, companies are making efforts to enhance benefits offered to potential hires. 60% of firms have increased base pay, and 36% have provided additional incentives or performance bonuses. 24% have raised contributions to benefit plans, and 18% are paying more in overtime due to a reduced labor pool. Beyond this, firms are also increasing their investment in training programs with 56% of respondents reporting an increase in training and development. It’s clear that industry companies are continuing to look at ways to retain key employees to cope with the shortage.
It appears that construction companies have several challenges to manage in 2018. The flow of new work combined with labor shortage will mean businesses need to find more innovative ways to stay competitive. If you have questions about the survey or need assistance with an accounting, tax or audit issue, JLK Rosenberger can help. For additional information, please call us at 949-860-9902 or click here to contact us. We look forward to speaking with you soon.