Supply chain problems have afflicted many companies around the world since the beginning of the pandemic, but few have been affected quite as much as construction work. Whether it’s from a shortage of building materials to a shortage of actual workers, construction companies have been going through challenges after challenges for years.
For more information on this topic, we’ll take the “Economic Pulse” – real-time checks on the health of the economy from a variety of perspectives.
Marketplace’s David Brancaccio spoke with Maurice Raming, president of the O’Neill Construction Group in Portland, Oregon. Below is an edited version of their conversation.
David Brancaccio: When we last spoke last summer, wood was hard to come by; You were also talking about steel – how is the shortage now?
Maurice Rahmaning: In fact, they did not improve. We were optimistic as we looked at the exit from the pandemic that materials would become more and more available, but the opposite kind happened. We still look to very long lead times – in some cases up to a year – when we talk about the different types of equipment and steel required in projects.
Brancaccio: If steel is hard to come by, I mean, are there alternatives for you?
Rahming: Well, one of the things we see – and it’s actually a positive result – is that a lot of developers are looking for laminated timber. It is laminated in such a way that it provides strength equal to or greater than steel, which has better environmental impact. And so we’re kind of excited to see more of this product being used. It is locally sourced, so it has a winning streak behind it.
Brancaccio: You mentioned the equipment – like the electrical box? Canal, tube or canal? what do you need?
Rahming: Yes, that is basically what is required to make these buildings online. You have one manufacturer that is short on cutters, and then you have the other manufacturer that is short on major service equipment. So we’re kind of going to put things together. I’m sure everyone is in the same boat, trying to make the systems work by seeing which bits and pieces they can get from different areas.
Brancaccio: Do the suppliers give you any hints as to what the problem is? Are the ships still stuck at sea or factories in Asia? what do you think?
Rahming: Most of them are factories. It is mostly a shortage of manpower. I think what happened is, after the pandemic, a lot of these workers didn’t go back to their previous jobs, so they have a severe workforce shortage as well.
Brancaccio: What about people for your business? Are you looking for more people?
Rahming: Yes, we have a shortage of manpower too. One of the things I would say, on a positive note: We were a little concerned with the continuity of opportunity for both the workforce and the enterprise, and so the bipartisan infrastructure bill established that kind of path. So we feel more comfortable being able to go ahead and hire more people, because we see those projects take off. So we’re excited about that.
Brancaccio: Do you find people when you announce openings?
Rahming: It’s still hard to find people. And perhaps some of the biggest challenges are with the day-to-day electricians, the day-to-day carpenters – they continue to retire; Skilled workers are one of the biggest challenges. We’re seeing where school systems and things are trying to look at doing more to encourage graduates out of high school to get into this industry, but that’s also slow going.
Brancaccio: And I suppose you could build up some of the increased costs you face in your future offerings, but did you end up holding the bag in previous decades where people might have been more expensive, or certainly materials became more expensive?
Rahming: Yeah, and I think that’s still a challenge because some of these projects we’re pricing in and we’re bidding on. And so when we take bids and then you see fuel costs go up and you see labor costs go up, we can’t pass those costs on to the owner because we’ve already signed a contract — so we’re kind of stuck with accommodating that. So we’re all trying to figure out how to give developers a price we can keep with these caveats we’re looking at. Everyone is interested in steel prices and equipment prices which are very volatile.
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