How one construction company is navigating labor and materials shortages
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Out of all the challenges the construction industry is facing — from labor and materials shortages to coronavirus shutdowns making equipment parts difficult to acquire — Maurice Rahming, president of O’Neill Construction Group in Portland, Oregon, is most worried about finding workers.
“We’re all struggling to get the same small group of people,” he said in an interview with Marketplace’s David Brancaccio.
And while the pandemic may have exacerbated the problem, long-term trends are likely at work too.
“We have what we call the ‘silver tsunami,’ which is the quantity of people retiring out of the industry, and they’re not being replaced — and that was even pre-COVID. So we can lose a lot of the industry if we don’t start encouraging people to go into the trade,” said Rahming, who owns the business with his wife Ali O’Neill.
Rahming spoke with Brancaccio about dealing with the shortage and why prospective job-seekers today might be underestimating the industry. The following is an edited transcript of their conversation.
Battling stereotypes about construction work
David Brancaccio: When people hear the word “construction,” they’re going to think it’s going to break their back. You think the industry is changing; people should look more closely if they’re thinking of that kind of career?
Maurice Rahming: I think the career is getting more and more technical. So a lot of the systems that we’re building today go beyond just swinging a hammer. These are smart buildings — they’re very large computers.
Brancaccio: Yeah, the buildings themselves, in a sense; the way that cars are also rolling computers. But you have a very crucial vested interest in attracting people to the field. You think there’s not enough people out there right now?
Rahming: Well, I think that there’s not enough people out there. We have what we call the “silver tsunami,” which is the quantity of people retiring out of the industry, and they’re not being replaced — and that was even pre-COVID. So we can lose a lot of the industry if we don’t start encouraging people to go into the trade.
Brancaccio: You mentioned the stereotype that you’re going to be dragging 50-pound bags of cement all the time; that’s not what the job necessarily entails. But what about pay? Do you think construction has a reputation of being low-paid?
Rahming: I think that some of it is the concept of seasonal work, [that] you’ll get paid well in the summer but you’ll be unemployed in the winter. And that’s simply not true today. It’s no longer a seasonal industry. It is year-round. And these are livable wage jobs. Especially for when you get into the MEP trades — mechanical, electrical, plumbing — those are well-paid jobs without student loans and student debt at the tail end of them.
Diversity in the industry
Brancaccio: What about diversity? How welcome are people with different skin colors who would want to enter that line of work?
Rahming: I think that is one of the challenges industry also faces. Unfortunately, there’s not a lot of diversification in the construction industry. I do think there’s a lot of initiatives that are trying to get more diverse workers into the trade, but currently it is a challenge being able to inform people of the opportunity because they don’t see themselves on day-to-day construction sites. And, hopefully, we can change that.
Brancaccio: How did you get attracted to the industry?
Rahming: [My family] was on government assistance for quite some time. And I got to the equivalent of a pre-apprenticeship program and I recognized that this was my pathway out of poverty. I went ahead and got my journeyman’s card and my supervisor’s card, and then started my business before I was 30, as well. So I got interested when I was exposed to the opportunity and recognized that this is actually really interesting, really fun [and] really good pay. This is a way I can support me and my family.
Brancaccio: It’s fun? I thought it was supposed to be work.
Rahming: You know, I feel blessed because it’s challenging, interesting. There’s not one project that’s the same as last one I went to, so every project provides a new challenge to it. It’s not a cookie-cutter, it’s going to change.
Contending with shortages
Brancaccio: As we, hopefully, emerge from the pandemic, what are some of the challenges for your company? We talked about labor shortages. I’ve been talking to some contractors out here and the cost of materials is always front and center right now.
Rahming: Yeah, the cost of materials. We also run into challenges with the large equipment that we’re buying on projects — because their parts are globally sourced, we keep having plants that, even now, they get shut down because of COVID and that creates lots of delays on us being able to produce the product for the end user because everything’s so interconnected.
Brancaccio: Heavy equipment — like a part for a backhoe is going to take a long time?
Rahming: A part for a backhoe, more so for mechanical air conditioning units or switchboards. We had the [switchboard] breaker plant got shut down, so we couldn’t final out a building because we couldn’t provide them power.
Brancaccio: Wow. And on materials, we think of lumber, but it’s not just lumber that got expensive.
Rahming: Yeah, it’s all the commodities: our wire price, our steel price. One hiccup in the supply line and everyone’s scrambling to try to figure out how to complete a project. And it has impacts for the owners, as well, because a lot of these buildings need to be operational and running on a certain timeline. And we struggle to be able to deliver when we can’t get the parts to do the work.
Brancaccio: At least demand must be high. That’s one of the central things that economists are trying to tell me: that we have a housing shortage nationwide and that there’s a lot of interest in maybe less-so commercial buildings but more-so residential.
Rahming: Demand is definitely high. Some of our concerns are with inflation. We do have some concerns as we try to price projects. We want to try to hold to that project, and when we have massive fluctuations, it’s really hard to give customers accurate numbers of what the value is going to be next year. And today’s prices are not going to be the same prices — not only next year, but it would be lucky if they’re the same prices within the next six months.
Brancaccio: It’s clear you think the industry needs to do better marketing to attract more people into construction. You also have the ageing workforce and people retiring. That also could be inflationary if you think about it longer-term, if you start measuring in not months, but in years.
Rahming: Definitely, and that’s what we’re seeing: people are having signing bonuses, additional pay. So all of those things add towards higher prices for the consumer because we’re all struggling to get the same small group of people.
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