Labor Losses Open the Door for New Materials & Services

The building industry isn’t what it used to be. The booming years in the late 1990s and early 2000s gave way to a popped housing bubble and plummeting securities tied to U.S. real estate pricing. Although it’s now on the upswing, the industry still hasn’t rebounded to its once robust employment numbers and is still in dire need of help.

To get a clearer picture of the industry’s numbers prior to the downturn, let’s look at at the number of persons employed across residential housing industry sectors from 2002 (a strong year for the home building market) through 2007 (as the industry started to contract), and compare those years to 2012 (the latest year with compiled data).

The numbers show a humbling reality: over a quarter of a million people fled just these four sectors of the building industry over a ten-year period. Preliminary numbers for 2014 don’t look strong either. (Notably, these figures don’t include the significant number of undocumented workers involved in the industry, particularly in framing. Their impact can’t be quantified, but it also can’t be ignored. Including their exodus from the industry would paint an even starker picture of the employment loss that occurred from 2002-2012.)

Now, let’s look at the number of building permits issued for privately-owned, single- and multi-family housing over a similar time period:

2013 and 2014, though not part of the five-year employment census, reinforce the simple fact that after hitting lows in 2009-2010, permit numbers are now growing steadily. The obstacle this data makes clear is the number of permits issued is far higher than the number of workers joining (or re-joining) the building industry. So what now?

Framers are the first to say the industry outlook regarding worker shortage is bleak. Bruce Jones, a professional contractor in Hanover, PA, said the pressure to keep up with work is on framing crews.

“What used to be a 20-man framing crew is now a 14-man crew. What used to be a 10-man crew is now a 7-man crew,” Jones said. “You know, I’m used to seeing multi-generations of families working in carpentry, but so many have left. And the younger kids today, they don’t want to work in a physically demanding job.”

Jones is surviving the worker shortage because he’s not the average framer. In the 1980s, he and a friend designed a truck that served as a mobile wall panel manufacturing vehicle right at the jobsite. Ten years later, business was good enough that they built a permanent shop. The move has served him well: despite going from a peak crew of 300 to 50 in-house employees and roughly 100 subcontractors today, Jones survived the recession and hasn’t lost any work. The secret to his success? Cross-utilization of his workforce.

“We’ve been able to weather it, and we’ve built good relationships for 30 years. When we’re slow in the panel shop, I transfer my guys into a field crew, and when we’re slow in the field they come in to work on wall panels,” Jones said.

Slow is not something Jones is currently experiencing, though. He said this last year has been extremely busy. “We’ve been working a lot of overtime because, realistically, we’re about 40 men short for the amount of work we have.”

Aside from working overtime, framers cannot do much to offset having fewer people. Andy and Frank Mudd, brothers and co-owners of Southernwood Framing, LLC, say many framers try to look the other way and ignore the lack of labor. The brothers run 37 crews of about 230 subcontractors out of LaPlata, MD. They’ll be the first to admit they need a bigger workforce but try to offset it as best they can.

“Since the loss of so many guys in the industry, we provide a forklift on every jobsite, stick-framed or panelized, to make up for it,” Frank said. Why? Although a lift can’t take the place of a skilled worker, it can make up for lack of hands during installation.

Andy said 95 percent of their business is residential. While they do work with general contractors who still stick frame, more and more colleagues are using components, especially in multi-family apartment housing. The upside to installing components with lifts, said Andy, is speed and accuracy—with less labor, of course.

“A crew of four or five guys with one guy taking the lead, using wall panels, can build faster than stick framing,” Frank said. “It’s about a day and a half less time…but you’re more dependent on machinery to get it done, so the labor savings will be reduced by the cost of machinery.” Both brothers know there will be a breaking point where the need for workers will be so great that either jobs won’t be finished as quickly as they were in the past, or alternate methods will be used.

That break point may be close, based on the number of millennials in the U.S. No other group drives the need for apartments more than college students and unmarried adults in their twenties. The current population of youth born between 1982 and 2000 is 83.1 million, or more than one quarter of the nation’s population. To put this in perspective, the size of the baby boom population, born between 1945 and 1964, was 76 million.

Andy said components have already revolutionized apartment construction, as they are faster to install and require fewer installers. Soon, stick-framed apartments will be a thing of the past. The question now becomes how componentized framing can make up for lost workers and be a more significant part of the cost savings equation.

Scott Stevens, President of Modu Tech in Baltimore, MD, said the time will come when the price per square foot to frame walls using components will be cheaper up front than stick framing. “Right now….panels and components aren’t quite at [the same cost per square foot as stick framing], being a little more expensive. However if labor increases further in cost when compared to the cost of materials to frame a wall, components will win.”

Kenny Shifflett, owner of Ace Carpentry in Manassas, VA, said the cost of componentized framing is the largest obstacle for framers and general contractors but shouldn’t be the only concern. “It’s not always about the cheapest component but rather it is the component with the best design that fits your project.” In fact, Shifflett said, sometimes it makes financial sense to spend more money on the right design and the best-quality material. “It saves you money when you consider shipping costs, field assembly and field installation.”

Since the initial cost of component framing is generally more than stick framing, component manufacturers (CMs) can facilitate cost savings through reduction in field assembly time, installation efficiency, product application consistency and engineered design. Furthermore, CMs can offer value-added engineering and installation services that stick framers can’t.

For example, Stevens said some CMs offer specialized services like Building Information Modelling (BIM), a multi-dimensional building model highlighting the intersection of all necessary electrical, HVAC and physical elements of a building. Stevens said BIM is usually supplied by architects and building designers. However, just as framers have left the industry, the number of architects has declined too, leaving a gap CMs can fill. “If you can offer these services to your project, it’s a real benefit,” Stevens said. “You can cover some of the shortage in these professions [and] trades, and it makes you more valuable to the whole project.”

But with all the potential to increase efficiency, decrease the need for labor and provide extra services to customers, CMs must continue supporting the framer’s needs, which during the transition from stick framing to component framing, has everything to do with training and education, said Stevens. “Labeling, packaging, dimensional details, installation details—these are all necessary because as buildings are becoming increasingly complex, so are the components being installed in them,” Stevens said. “There’s different types of wall panels, shear walls and load paths that need load resisting design. It’s becoming harder to install components for framers in the field.”

The silver lining in the industry’s downturn is that those who battled through it can now ride the upswing, benefiting from all the income and business growth that come along with it. Componentized framing, already a staple for efficiency and accuracy, is sure to be a major player in mitigating the loss of workers. Nobody thinks introducing innovation into the building construction industry is easy, but the building and engineering marvels of our nation’s history tell us it’s worth the effort.